UK hotel sector at ‘turning point’ as deals hit ten-year high

There is a renewed appetite for investment into the UK hotel sector, with transactions up 35% on full year 2023.

UK hotel investment transactions hit an estimated £3.08b in the first half of 2024, according to Savills research.

This is the highest volume since the same six-month period of 2015 – almost a decade ago – when deals were worth £3.61b.

The latest activity is also 5% above the pre-pandemic five-year average of the first half-year.

Much of the boost is due to significant portfolio transactions, which account for nearly 70% of deals so far this year. This includes Blackstone’s reported £780m acquisition of Village Hotels from KSL Capital Partners.

Tim Stoyle, head of UK hotels at Savills, said: “The increase in volumes marks a turning point for hotel activity and investor confidence; the fact that large portfolio acquisitions are getting over the line highlights returning appetite to increase exposure to the sector post the uncertainty generated by rising debt costs in late 2022 and into 2023.”

Rob Stapleton, director, head of UK hotel capital markets at Savills, added: “The ebb and flow of hotel capital markets has made for a busy year, with larger portfolio and platform transactions very much back in vogue.

“Investors continue to seek opportunities to deploy capital in the sector with either structural levers, or differentiated business models with aggregation plays the consistent themes we’re seeing.

"High quality assets also continue to receive substantial interest and, given the volume of opportunities being marketed, we anticipate full year 2024 numbers to surpass £5.5b, more than double the £2.28b recorded last year.”

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