EU: According to the European Hotel Transactions 2020 report by HVS, single asset transactions totalled €5.5 billion at 65 per cent of the total, with portfolio deals representing the remaining 35 per cent at €3 billion.
The total European hotel transaction volume fell by 69 per cent during the year of the pandemic, reaching €8.5 billion compared to a record high in 2019 at €27.1 billion.
In January and February, volume was up 2.5 per cent on 2019 at €2.7 billion with a 1.8 per cent rise in the average sale prices per room to €170,000. The subsequent following lockdowns pushed transaction levels down -66 per cent, however high net worth individuals invested in larger volumes of hotels than in the previous year.
A total of 201 hotels and more than 44,000 rooms enhanced owners across Europe in 2020. The top two destinations were the UK (total of €2.1 billion) and Germany (€1.7 billion). Of these countries, London and Munich ranked the most popular in terms of transaction worth (€1.6 billion and €501 million respectively).
HVS expects that the second half of 2021 will show signs of transaction volume recovery. The bulk is likely to happen in 2022 in line with rising hotel revenue streams.
Shaffer Patrick, associate at HVS Hodges Ward Elliott (brokerage and investment division) said: “The full impact of the pandemic is expected to affect the transaction market later this year with an increase in distressed debt and opportunistic investment ahead of a gradual market recovery. However, the majority of volume recovery is expected in 2022 as immunisation programmes are completed and the leisure and corporate travel sectors start to recover.
“There is still a huge weight of capital looking to invest in hotels,” he continued, “and the availability of distressed acquisition opportunities is likely to be significantly less than anticipated when the pandemic began, which will support recovery in asset values. Many owners may try to hold on longer to benefit from recovering pricing before they sell.”
The 2020 European Hotel Transactions report can be downloaded here.
Last week, HVS published its 2020 European Hotel Valuation Index, which reported average declines between five and 15 per cent over the past 12 months for European hotel values. Read the article here.