Hotel transaction activity across the UK totalled around £0.8bn in the second half of 2013, 66% higher than that reported in H2 2012 (£0.5bn), according to analysis by business advisory firm, Deloitte.
Nick van Marken, global head of hospitality at Deloitte said: “The spotlight has returned to hotels as an investment class, underpinned by a clear market recovery and improved macro-economics. The many portfolio deals that closed in H1 laid a fantastic base and the Hilton IPO at the end of the year underpinned the increasingly positive market sentiment.”
While the first half of 2013 was dominated by portfolio deals; namely the sale of the Principal Hayley portfolio to Starwood Capital, the acquisition by ADIA of 42 Marriott-operated hotels, and the acquisition of Malmaison and Hotel du Vin by KSL, H2 saw a shift back towards single asset deals, which represented 65% of transaction volume. The only notable portfolio sale in the second half of 2013 was the acquisition of the 1,200-bedroom Menzies portfolio by Topland.
The total transaction volume for 2013 passed the £3bn mark, reaching a six-year high. The speed of transactions was also accelerated across the county due to better aligned price expectations.
In terms of single asset deals, London continued to dominate (75%), driven by an almost insatiable for hotel real estate. Notable transactions included the £90m debt disposal of the Radisson Blu Portman to London and regional (which will secure them controlling interest) and the £88m deal between private equity firm Carlyle Group and Shiva Hotels for the re-development of Millennium Bridge House as a hotel (the sale of the London Edition closed in 2014). Activity outside the capital continued to be predominantly driven by distressed sales and included two disposals in York for a total of £24m (Park Inn and Ibis) as well as the acquisition of the Novotel Cardiff for £12m by the Greater Manchester Pension Fund.
Looking at the prospects for the market in 2014, Mr van Marken said: “We expect to see the completion of a number of deals early this year; including that of the De Vere Venues. Sovereign wealth funds, specialised investment groups and private equity will remain the dominant buyers in 2014, and we expect the continued influx of foreign capital.”