UK hotels deals hit £5.4bn in 2017

By James Buckley - Monday, January 08, 2018 11:02

Investment into the UK hotel market reached £5.4bn across 219 deals in 2017 according to figures from Savills.

The total represents an increase of 32% from 2016, in which levels totalled £4.1bn and is 51% above the 10 year average of £3.6bn. 

In 2017 the UK hotel market was driven by an increase in activity from overseas investors, a greater sense of political and economic stability and the sale of several large portfolios in the second half of the year. According to the firm, 60% of the transactions by value were individual sales, representing £3.2 billion of the total.

The high level of individual transactions can be attributed to the break-up of larger portfolios that were bought in 2014 and 2015. Savills notes that average price per key has risen from £104,255 to £145,303 over the last 12 months as investment volumes have increased.

Martin Rogers, head of UK hotel transactions, said: “Last year was a fantastic one for the UK hotels market as appetite for assets came from both domestic and overseas sources. The popularity of the UK has been boosted in 2017 by the rise of the staycation and the stability following the EU referendum in 2016. We expect this popularity to continue as hotels move further into the mainstream.”

Key transactions in 2017 included the sales of the London hotels JW Marriott Grosvenor House to Ashkenazy Acquisition Corp and the £80.2 million sale of the Sloane Club in Chelsea by Caledonia  Investments and the £58 million sale of the Holiday Inn Manchester. The UK regions accounted for 58% (£3.1 billion) of transactions by value, with London accounting for 42% (£2.3 billion).

International buyers accounted for £2.4bn (44%) of investment into the UK hotel market notes Savills, with the group being particularly active in the first nine months of the year. The firm notes that the most active geographies have been USA (£840 million), Sweden (£680 million), boosted by Pandox’s Jurys Inn portfolio acquisition, and Singapore (£382 million). UK domestic buyers had a slow start to the year however activity picked up in the last quarter and the group accounted for £3bn(56%) of total investment in 2017.

George Nicholas, head of global hotels at Savills, added: “The UK hotel market has benefitted from considerable cross border investment in 2017. A number of countries including South Africa and Sweden have considerably increased their presence in the market as UK hotel assets continue to provide long term security, an attractive quality for overseas investors.”

jbuckley@costar.co.uk

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