Savills : UK hotel investment reaches nine-year high at £8.1 billion in 2015

International real estate advisor Savills has reported that total transaction volumes in the UK hotel market reached £8.1 billion in 2015, the highest level since the £8.3 billion record in 2006. The figure also marks an increase of 31.6% on the £6.1 billion full year total in 2014.
Transaction volumes in the London hotel market doubled to £3.6 billion in 2015 from £1.8 billion the previous year, led by a number of high profile deals including the £1.37 billion sale of a share in the Maybourne portfolio which included Claridge's. Savills also highlights the £345 million sale of the Holiday Inn, Kensington and the £270 million sale of the Bulgari Hotel, Knightsbridge among the capital's most significant deals of 2015.
The firm reports that the regional hotel market remained strong last year, accounting for 55.6% of transaction volumes although this is down on its 71% share in 2014. Notable regional transactions of 2015 include the sale of the Hilton Newcastle Gateshead for approximately £37 million and the sale of the Cambridge City Hotel for £61.5 million.

Portfolio transactions dominated for the second consecutive year, accounting for 59.3% of volumes in 2015 and 52.9% in 2014. Major portfolio transactions last year included Lone Star Funds' acquisition of a portfolio of 22 Mercure branded hotels as part of their £1bn acquisition from Moorfield and Fraser Hospitality's purchase of the Malmaison portfolio for around £363 million.
Robert Stapleton, hotels director at Savills, comments: 'With the operating landscape in the UK's regional markets continuing to improve and such a significant amount of equity looking to deploy into the sector, we expect 2016 to be another strong year for investment into the UK hotel market. We are still experiencing growth in demand for regional assets from investors seeking higher return profiles. We equally expect London to continue to show impressive capital growth, albeit at a slower rate, as well as increased transaction volume as overseas investors in particular seek capital preservation opportunities to shield money from the volatile equities market.'