Strong start to a potential record year for UK hotel transactions

Hotel transaction activity across the UK is on the up, according to analysis by Newcastle-based Deloitte

Deloitte Paul Feechan, senior parter, Deloitte
Deloitte Paul Feechan, senior parter, Deloitte

Hotel transaction activity across the UK totalling around £1.5bn in the first half of 2014, 65% higher than the figure reported in the first six months of 2013, business advisors Deloitte said.

The first quarter of the year was dominated by provincial portfolio deals including the sale of the Four Pillars portfolio in January for £90m and De Vere Venues in March for £232m, both of which were acquired by Starwood Capital.

Two former Akkeron Hotel portfolios also changed hands after entering administration.

There was a lack of significant portfolio transactions meaning single assets tended to dominate, contributing 70% of total transaction volume.

London led in terms of deal size but activity outside the capital was bolstered by investors looking to consolidate, banks offloading assets, distressed sales, the scarcity of London deals and improved trading fundamentals and higher profit margins.

Merger and acquisition activity in the regions contributed 60% of total investment, around £780m and the second highest figure in eight years.

Paul Feechan, senior partner and consumer business expert at Deloitte in the North East, said: “This is the second strongest start to a year since the peak in 2007.

“Macro-economic fundamentals have finally caught up with investment sentiment, which has further stimulated appetite for the hotel sector.

“We anticipate continued strong interest from investors but a potential lack of product given the substantial capital the market has to deploy.”

“We see many international buyers, especially from the US, Middle East and Asia, showing continued strong interest in London, and increasingly in the regions. We expect deals will close more quickly in the second half of 2014 with significant appetite on the part of private equity in particular. The UK hotel sector appears firmly back in favour.”


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