Record-breaking year for European hotel investment

The UK remained the largest investment market for Hotel investment in Europe, capturing 26.1% of capital deployed. However, investment volumes in the UK were down 7.4% on 2018.

Hotel investment in Italy continued to gain momentum, increasing 141% year-on-year and maintaining its place as the third largest European hotel market. Italy had a particularly strong end to the year with 21 deals taking place in the final quarter. Two landmark deals included the acquisition of the Venice Murano luxury hotel scheme by Hong Kong based Langham Hospitality Group, and the acquisition of the former BNL bank headquarters in Rome by Antirion SGR for €190 million (before conversion costs) to realize a 160-key ultra-luxury hotel.

France and Benelux recorded 19% growth in hotel deal volume year-on-year. Whilst the year got off to a relatively slow start, Benelux saw an influx of deal activity towards the end of the year, with transaction volumes reaching over €840 million in Q4 2019 alone.

Germany had a strong end to the year, with transactions in Q4 2019 totalling €2.4 billion. Notable transactions included the first for LaSalle’s Encore+ fund, having completed on the ibis Budget and Adagio Access aparthotel in Munich’s Olympiapark. Germany hotel investment increased by 24.5% year-on-year.

Paul Kapiris, Director, Head of Cross Border Hotel Investment at CBRE, explains:

 “A flurry of deal activity in Q4 2019 helped the European hotel investment market achieve impressive growth figures. Strong investor demand from more core investors have compressed yields in the traditional markets, resulting in higher return investors looking for opportunities in CEE and Portugal.”

Investors are looking to invest in markets with strong demand generators, combined with strong location, covenants and experienced management teams. Capital favours transparency, liquidity, corporate governance and currency plays. Margin pressures on operators to improve efficiencies will generate investment opportunities in 2020.

james.wallace@realassetmedia.com