European hotel transaction volume reached €21.7bn ($US26.64bn) in 2017, up 22% on 2016 and the second largest figure ever recorded, according to the annual European Hotel Transactions report published this week by Global hotel consultancy HVS and its brokerage and investment services division HVS Hodges Ward Elliott.
The report claims 323 hotels – 59,500 rooms – were sold in 2017 for over €7.5m.
Activity levels have risen by nearly a third (29%), to €9.3bn, with Spain 30,0000 rooms sold in the country in 2017 across 14 portfolios.
“A year of strong RevPAR growth across most of Europe was reflected in transaction levels, particularly in London, Amsterdam, Barcelona and Madrid,” commented report co-author Peter Szabo, associate at HVS Hodges Ward Elliott.
“Other secondary markets such as capital cities in the CEE and Southern European resorts also enjoyed increased investor interest as hotel performance saw big improvements,” added Szabo.
Transactions in Germany saw a slowdown in 2017 after a record year in 2016, with portfolio sales down 38% to a value of €1.5bn. However, single asset sales saw an increase, with Munich and Berlin proving particularly popular with investors.
The year saw Paris fall to third place in the table, with €777m worth of transactions. Madrid and Barcelona recorded a combined transaction volume of €1.1bn.
“Stability in both exchange rates and interest rates and the availability of hotel stock has helped Europe become popular amongst hotel investors, particularly private equity investors from North America,” commented report co-author Magalí Castells, associate, HVS.
The UK regained its leading role in transaction activity with sales volumes accounting for 25% of total activity reaching a value of €5.4bn, up from €3.6bn in 2016. Single asset sales saw values of €3bn, while portfolio activity accounted for €2.4bn, despite ongoing political uncertainties. London was once again the leading European hotel transaction market, with a total volume of some €2.5bn, ahead of Amsterdam at €1.3bn.
“As we move into 2018, key factors that will influence the transaction market will be interest rates and staffing pressures. As stock becomes scarce in primary markets developers and investors will be increasingly looking at secondary markets such as Southern Europe or the CEE,” said Castells.