Resurgence of the UK hotel transaction market in 2013
13 January 2014
- Transactions in H2 2013 up c.70% year-on-year;
- Total transaction volume for 2013 passed the £3bn mark - a 6-year high;
- London accounts for c.75% of total deals;
- Speed of transactions accelerating due to better aligned price expectations.
Hotel transaction activity across the UK totalled around £0.8bn in the second half of 2013, 66% higher than that reported in H2 2012 (c.£0.5bn), according to analysis by Deloitte.
Nick van Marken, global head of hospitality at Deloitte, comments: “The spotlight has returned to hotels as an investment class, underpinned by a clear market recovery and improved macro-economics. The many portfolio deals that closed in H1 laid a fantastic base and the Hilton IPO at the end of the year underpinned the increasingly positive market sentiment.”
Whilst the first half of 2013 was dominated by portfolio deals; namely the sale of the Principal Hayley portfolio to Starwood Capital, the acquisition by ADIA of 42 Marriott-operated hotels, and the acquisition of Malmaison and Hotel du Vin by KSL, H2 saw a shift back towards single asset deals, which represented 65% of transaction volume. The only notable portfolio sale in the second half of 2013 was the acquisition of the c.1,200-room Menzies portfolio by Topland.
In terms of single asset deals, London continued to dominate, driven by an almost insatiable for hotel real estate. Notable transactions included the £90m debt disposal of the Radisson Blu Portman to London & Regional (which will secure them controlling interest) and the £88m deal between private equity firm Carlyle Group and Shiva Hotels for the re-development of Millennium Bridge House as a hotel (the sale of the London Edition closed in 2014). Activity outside the capital continued to be predominantly driven by distressed sales and included two disposals in York for a total of £24m (Park Inn and Ibis) as well as the acquisition of the Novotel Cardiff for £12m by the Greater Manchester Pension Fund.
Looking at the prospects for the market in 2014, van Marken remarks: “We expect to see the completion of a number of deals early this year; including that of De Vere Venues. Sovereign wealth funds, specialised investment groups and private equity will remain the dominant buyers in 2014, and we expect the continued influx of foreign capital.”
Notes to Editors
In this press release references to Deloitte are references to Deloitte LLP, which is among the country's leading professional services firms.
Deloitte LLP is the United Kingdom member firm of Deloitte Touche Tohmatsu Limited (“DTTL”), a UK private company limited by guarantee, whose member firms are legally separate and independent entities.
Please see www.deloitte.co.uk/about for a detailed description of the legal structure of DTTL and its member firms.
The information contained in this press release is correct at the time of going to press.
Member of Deloitte Touche Tohmatsu Limited.
"The spotlight has returned to hotels as an investment class, underpinned by a clear market recovery and improved macro-economics. The many portfolio deals that closed in H1 laid a fantastic base and the Hilton IPO at the end of the year underpinned the increasingly positive market sentiment.”-Nick van Marken, global head of hospitality