European hotel transactions in 2020 exceeds €10bn

Europe: Data from Cushman & Wakefield reveals that hotel transaction activity in Europe remained resilient with 43 per cent of deal volume taking place after the pandemic outbreak.

Despite the total investment volumes declining by 63 per cent compared to 2019, the hotel market recorded nearly 400 transactions throughout 2020.  The UK saw the highest volume of deals (€2.3bn) followed by Germany (€1.8bn) and Spain (€1.2bn).

Among the lest impacted markets were Sweden, Switzerland, Greece, Portugal and Spain. Sweden actually saw an increase in transaction activity, up by five percent compared to 2019.

Jon Hubbard, head of hospitality for EMEA at Cushman & Wakefield, said: “The hotel sector across Europe has been hit hard by Covid-19 lockdowns, which have understandably resulted in a sharp drop in investment volumes. However, the hotel industry is unique in that, for the most part, there is not a viable virtual pivot for travel and tourism – there will always be a need for hotel accommodation. Investors recognise this, and their sentiment for the sector remains positive for the medium to long term. The continued transaction activity in 2020 and the number of deals we are seeing in the pipeline reflect this confidence.”

European investors accounted for a large majority of transaction volumes (83 per cent), with close to half of the total transaction volume coming from institutional investors (48 per cent).

Just over a quarter (26 per cent) of the deals were in development or conversion projects as opposed to operating assets. One example was the acquisition of the EDITION Madrid by Archer Hotel Capital for over €220m. The property is expected to open in 2022.

One third of transaction volume in 2020 was outside urban locations, however the share of non-urban locations increased to over 41 per cent after the virus outbreak. This could suggest investors’ expectations of a quicker recovery and/or better long-term prospects for hotels driven by leisure demand that are typically located outside major cities. A decline in acquisitions of airport hotels was also down by 87 per cent.

Hubbard added: “As we move through 2021 and vaccination programmes start to take effect and economies reignite, travel and going on holidays, whether domestically or abroad, will be front and centre of people’s minds. We’ve recently seen this in the UK, with spikes of enquiries to holiday companies following the publication of the British Prime Minister’s roadmap out of lockdown. With cities unlocking too, more business travel is set to be on the agenda and larger-scale events like conferences will follow. As Europe slowly emerges from this crisis, the desire for more face-to-face contact and quality leisure time will provide a significant boost for the hotel sector.”

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