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05. März 2013     Print Print 

European hotel transaction activity down but more properties are coming to the market

According to HVS, the UK’s hotels market saw the most transaction activity during 2012 with a total volume of €1.4 billion, accounting for 38% of hotel volume in Europe. European hotel transaction volume reached a total of approximately €5.6 billion in 2012, a decrease of 21% on the €7.1 billion recorded in 2011 highlighting the fact that investors in Europe’s hotel market are still being cautious over purchases.

The latest 2012 European Hotel Transactions report, published annually by HVS London, notes that activity during 2012 involved some 101 transactions (of more than €7.5 million per property) with 301 hotels and more than 39,000 rooms. Although total volume was above the 2009 trough of €2 billion, it remains below the 10 year average of €9.5 billion since 2002.

Activity during 2012 was strengthened by a number of major transactions, such as the sale of the Metropol Moscow for US$273 million (€218 million) on the single asset side and Host Hotels & Resort’s acquisition of the Quintet Portfolio, comprising four hotels in Paris and one in Amsterdam for €440 million on the portfolio side.

Report author Luis Grilo, analyst, HVS Hodges Ward Elliott, said: “In comparison with 12% in 2008, high-net-worth individuals have their increased acquisition activity, accounting for 24% of transaction volume in 2012. Private equity firms have decreased their activity with 7% in 2012 compared to 17% in 2008, a direct reflection of the lack of debt available to leverage acquisitions.”

Single asset transactions
In terms of single asset transactions in 2012, the hotel investment market was dominated by
Hotel operators, high-net-worth individuals and real estate investors, which together accounted for 69% of total volume.

The UK was the most active market for single asset transactions with a total volume of almost €1.4 billion and some 33 hotels and more than 6,000 rooms sold. Despite a decrease in volume of 12% on 2011 the average price per room remained constant at €190,000. This is the result of more high-end assets changing hands in 2012 compared with the previous year.

A number of hotel development sites have also been sold in London, including the InterContinental Westminster and Hilton Bankside. In addition, the Odeon Site in Leicester Square was acquired by the Edwardian Group.

In France Union Investment acquired the 369-room Meliá Paris La Défense development for an undisclosed price. Bouygues Immobilier acquired the 617-room Pullman Paris Rive Gauche for €77 million and the 60-room Hotel Lancaster in Paris was sold by Spanish operator Hospes Hoteles to French hotelier Pierre Esnée for about €61 million.