Savills has recorded that UK hotel transactions reached £4.64 billion in 2019, down 42% year-on-year but 11% above the 10-year average. The number of transactions across the country was also down 47% yoy and 6% below the 10-year average. Overseas investors were accountable for 59% of market share, with the top three by country being, Hong Kong (c. £1 billion), Thailand (c.£450 million), and Israel (c.£260 million). Portfolio transactions accounted for 52% of investment activity in the UK, similar to 2018’s 53%.
Transactions into London totalled £2.31 billion, accounting for almost 50% of all UK hotel investment activity. Savills recorded the total volume for the rest of the UK was circa £2.33 billion, representing a 16% (South East), 20% (North), 9% (Scotland) and 6% (South West) regional split.
Rob Stapleton, Director, Savills Hotels team, explains:
“Investor confidence in the UK hotel market remains high and whilst political uncertainty in 2019 had an impact on overall deal volumes, yields remained low highlighting that, for the right assets, the UK continues to be a key focus for emerging hotel brands and international capital. We have already noted a marked increase in investor enquiries since the General Election result and anticipate this to translate into increased investment activity across the UK hotel market in 2020, with several notable transactions expected to transact in the first half of the year.”
Key single asset deals included: NH Harrington Hall, Sofitel London Gatwick and Crowne Plaza Kensington. Key portfolio deals included: The Grange Portfolio, Project Mauve and The Hallmark Portfolio.
Tim Stoyle, Head of Valuations, Savills Hotels team, added:
“Looking forward to this year we expect to see more stock coming to market across all grades of accommodation but primarily driven by demand for the budget and four-star segments. Demand for these assets in London and in core locations across the rest of the UK will be underpinned by the operational performance resulting from the growth of the staycation market, as well as the continued growth in international tourist numbers.”