UK hotel transactions leap 66% YOY for latter half of 2013

UK hotel transactions for the second half of 2013 saw a massive 66% rise to £0.8b, compared to the last six months of 2012.

Hotel transactions for H2 2012 was £0.5b, according to analysis by business advisory firm Deloitte.

"The spotlight has returned to hotels as an investment class, underpinned by a clear market recovery and improved macro-economics," commented Deloitte's Nick van Marken, global head of hospitality.

"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."

But while portfolio deals dominated the first half of 2013 - including 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 - the latter half of the year was led by single asset deals, which made up around two thirds (65%) of hotel transactions.

The acquisition of the Menzies portfolio, made up of around 1,200-rooms, by Topland was the only notable portfolio sale in H2 2013.

London continued to dominate the single asset deals, which Deloitte said was driven by an almost insatiable appetite for hotel real estate. 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 were notable single asset sales in this period.

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.

Examining the market prospects in 2014, van Marken added: "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."

UK hotel transaction market accelerates in first six months of 2013 >>