UK hotel transaction volumes reached a total of £6.6 billion in 2018, up 25% on the 2017 total according to Savills. The amount is 75.7% up on the long term average of £3.78 billion and has
been driven by an active portfolio market and increased activity from overseas buyers.
Portfolios accounted for 53% of the annual investment volumes for 2018 at £3.5 billion over 21 deals notes Savills. This is significantly up on the 16 portfolios traded in 2017 for a total of £1.5 billion. Of the top 10 portfolios that transacted in 2018, the average value stood at £332 million, 123% higher than in 2017. The increased transaction volumes in the sector were combined with larger portfolio sizes, the top 10 deals averaged 2,000 keys per portfolio – a 119% increase on 2017. Major deals included the sale by Starwood Capital of its Principal Hayley hotel platform to Covivio (formerly Foncière des Régions) and LRC Group’s acquisition of Lone Star’s Amaris Hospitality group.
According to the firm, overseas investors increased their activity in the UK hotel sector, accounting for 54% of total transaction volumes, up 20.5% on 2017 to reach £3.3 billion in 2018. This is the second highest amount ever invested in the sector by the group, beaten only by 2015 volumes which reached £4.3 billion. The top three by country were Israel (£1.1 billion), France (£860 million) and Canada (£420 million). On average, international investors spent on average £76 million per deal; 3.4 times more than domestic purchasers. UK purchasers accounted for the lion’s share of deal count at 75%, however this amounted to only 46% of volumes at £2.99 billion.
Tim Stoyle, head of UK hotels at Savills, comments: “The investment of overseas capital into UK hotels is testament to the strength of the sector even when facing Brexit uncertainty. This is further echoed in the popularity of portfolios which accounted for the majority of volumes, pointing to a positive sentiment in the market, buoyed by strong occupancy levels from leisure visitors.”
Investment volumes into London accounted for £2.6 billion (39%) of the total with the rest of the UK registering £4 billion of investment (61%). Total UK deal count has remained largely in line with previous years at 231 compared to 230 in 2017 and 220 in 2016. Key single asset deals include the acquisition of the Hilton London Kensington for £260 million by Cola Holdings and the sale of Manchester’s Midland Hotel for £115 million by Aprirose to Pandox.