Investment in the UK hotel market has reached £3.8bn as the third quarter comes to an end, already surpassing the total 2023 volume by £1.6bn, according to Savills.
Total transactions in Q3 reached an estimated £626m, 54% up on the same period last year, and Savills’ projections indicate that year-end volumes will reach £5bn, returning activity to 2019 levels.
In London, year-to-date volumes are 91% higher than the same period in 2023, after previously trailing behind regions that experienced an earlier rebound in investment activity.
The biggest Q3 transactions were Pandox’s acquisition of three Residence Inns from Starwood for £230m and Millemont’s purchase of the Yotel Edinburgh, also from a Starwood Capital affiliate.
Tim Stoyle, head of UK hotels at Savills, said: “Q3 hotel investment volumes highlight continued investor confidence and improved market sentiment. Falling debt costs have been a catalyst to this and we have seen a number of lenders coming to market. We expect this momentum to continue into Q4, as hotels prove themselves to be one of the most resilient and dynamic asset classes within commercial real estate.”
Rob Stapleton, head of UK hotel capital markets, added: “The hotel sector has shown remarkable resilience, bouncing back from market uncertainty with strong investment opportunities… Higher yields compared to other operational asset classes are driving investor interest, with a focus on portfolio and platform transactions. Investors are increasingly targeting structural levers and differentiated business models, with substantial interest in both high quality and budget assets.”
Photo © WestEnd61/REX/Shutterstock
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