European Hotel Investment Survey

Opportunity out of uncertainty?

November 2016

Our annual survey of delegates registered to attend the Deloitte European Hotel Investment Conference 2016 found some interesting insights following a mixed year. The following key findings represent the views of over 100 senior hospitality figures including owners, operators, lenders, developers and investors.

Our survey findings focus on three key areas:

The outlook for the European hotel market

Chinese and North American investors are expected to dominate the market in 2017 with 62% of respondents predicting China to be the biggest source of inbound investment into Europe, up from 51% last year and followed by North America (46%).

Despite a bumper year of transactions in 2015, deal flow has remained subdued this year. Hotel executives remain optimistic about future investment opportunities however, with 34% of respondents believing that the European investment cycle is 12-18 months away from peaking. Looking further ahead, nearly 60% of respondents view disposals and consolidation as future prominent investment themes.

The European hotel investment market: an ocean of opportunity

Amsterdam has replaced London as Europe’s most attractive hotel investment destination, after more than a third (34%) of respondents ranked the Dutch capital in first place. London (32%) had held top position for the last two years, but slipped to second place, followed by Barcelona (28%) and Dublin (24%), with Berlin and Madrid (both 18%) ranked joint-fifth.

Interestingly, only a quarter of those surveyed were concerned about the UK’s decision to leave the European Union, with the various European elections scheduled for 2017 generating greater unease (37%). Following this outlook, one-third of respondents cited the budget segment as being the most attractive area for investment next year, followed by the upscale (24%) and midscale (20%) segments.

Regional UK: navigating deep waters

For the third year running, industry leaders have named Edinburgh (47%) the most attractive hotel investment destination in the UK outside of London suggesting that, in Europe, respondents believe that the Scottish capital is now as attractive to investors as the likes of Rome and Lisbon. Edinburgh is closely followed by Manchester (46%, up from 40% last year) and a resurgent Birmingham (22%, up from 9%).

Thinking about 2017, half of industry leaders expect Regional UK RevPAR growth to be between 3-5% and more than a third of respondents (38%) expect to see multiples of 10x, with 20% expecting pricing to be higher at 12x or more.

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