Investment volumes for Q1 2014 totalled £952m, and Savills estimated there is £2bn worth of hotel assets currently on the market, with more coming up for sale in the next few months.
Michelle Webb, director of hotels at Savills, said: “We expect this to be another very active year, with the potential to beat last year’s transaction volumes which totalled £3.9 billion, the highest since 2007.
“In 2014 we expect a steady flow of assets being sold throughout the year as confidence in buyers’ and sellers’ pricing gathers momentum and operational trading continues to show signs of recovery.”
Savills said private equity buyers were the most active in the first quarter – driven by Starwood Capital’s acquisition of De Vere Venues and the Four Pillars portfolios.
Institutions also played a big part in the first quarter investment figures – buying up £189 million worth of budget hotels, leased to hotel chains such as Accor, Travelodge or Premier Inn.
Savills predicted there will be an increase in single asset hotel sales throughout the year ‘as lenders continue to recover their loans and new owners of portfolios look to rationalise their estates’.
IHG London expansion
The Savills report comes as IHG announced it had added two more London hotels, the Hotel Indigo – London Barbican and Holiday Inn - Watford Junction, to its portfolio in the Capital.
The 92-room Holiday Inn - Watford Junction is due to open this summer and will operate under a franchise agreement with Nine Hospitality Ltd.
The newly constructed 101-room Hotel Indigo – London Barbican is due to open in 2016 and will operate under a franchise agreement with Sanguine, which currently has six IGH hotels open in the UK and a further two under construction.
The addition of the Holiday Inn and Hotel Indigo brands to London means IGH has now signed all six of its European brands into the London pipeline
Angela Brav, CEO Europe, IHG said: “IHG already has a significant presence in Europe. Signing all six of our current European brands in Greater London is just fantastic and demonstrates the continued momentum in the market.
“We see plenty of room to grow here and these signings demonstrate the ability of our brands to penetrate markets across Europe both old and new. IHG’s relationship with our owners is absolutely key in maintaining long-term sustainable development and I’m thrilled to see us all growing together.”
Accor investment
Outside of London, hotel group Accor announced earlier this month that it would open a second Mercure hotel in Sheffield, having entered into a franchise with Dominvs Hospitality.
The 78-bedrooms hotel, formerly the Aston Sheffiled Hotel, will open this summer after extensive refurbishment. It will feature a bar, restaurant, meeting rooms, free Wi-Fi and parking.