Following a bumper Q4, where £1.42 billion transacted, total 2021 UK hotel investment volumes reached £4.14 billion, showing an 84.3% increase on 2020 volumes, just shy of the 15 year average of £4.22 billion. Savills acted on the two largest single asset transactions that took place in 2021, claiming almost 20% of market share by way of total investment volume.
Tim Stoyle, Head of UK Hotels at Savills, says: “The hotel sector has had a resilient year with strong momentum in the final quarter showcasing the appetite for UK hotel assets. While there remains operational challenges in the short-term, investors continue to be positive on the long-term outlook of the sector and we anticipate another strong year in 2022 for the UK hotel investment market.”
The regional UK hotel market experienced a considerable increase in investment in 2021, reaching £2.04 billion, more than 570% 2020 volumes. Private Equity capital (both domestic and international) commanded the regional market, accounting for 62.9% of hotel investment, reaching £1.28 billion. Notable deals include Goldman Sachs’ acquisition of The Belfry Hotel & Resort for c.£140m in November, and Zetland Capital Partners’ acquisition of the Macdonald Manchester Hotel and Macdonald Holyrood Hotel in November 2021.
Key portfolio transactions include Henderson Park’s acquisition of a portfolio of 12 hotels under Hilton brands (Project Conrad) in September, Marathon Asset Management’s acquisition of 17 Holiday Inn and Crowne Plaza branded hotels (Project Horizon) from Cerberus in May and Blackstone’s acquisition of Warner Leisure Hotels as a part of the wider Bourne Leisure transaction in February 2021.
In London, overseas investors continue to be active, accounting for 44.7% of 2021 volumes, including notable deals such as Singaporean based Fragrance Group’s acquisition of the Holiday Inn Kensington Forum in December. Total 2021 hotel investment volumes in London were £2.10 billion, up 11.0% year-on-year, while the number of transactions rose 68.4% over the same period, reaching 32 transactions.
Rob Stapleton, Head of UK Hotel Capital Markets at Savills, says: “There is a demand-supply disconnect in the market today and whilst 2021 transactions volumes showed an impressive rebound from 2020 levels, the continued relative lack of available hotel stock compared to the volume of capital waiting to be deployed, suggests this imbalance will be an ongoing challenge in 2022. However, the new year has started with positive momentum and we are preparing to launch a number of new hotel instructions to market in the coming weeks, which we anticipate will be well-received by the market.”