Hotel investment climbs 210% in H1 2024

Transaction volumes in the UK hotel real estate market have increased by 210% in the first half of 2024, reaching £3.9bn, according to Cushman & Wakefield. H1 2023 had seen £1.26bn invested in the sector. Cushman found that H1 2024’s investment volume covered almost 200 properties across the UK, representing 21,400 rooms. It noted that portfolio deals made up almost two-thirds of the total investment. Significant portfolio sales included the Radisson Edwardian Portfolio, comprising 10 hotels, Project Cobalt, involving the sale of LXi REIT’s Travelodge portfolio (66 hotels), Project Leopard, encompassing the sale of Landsec’s Accor Portfolio (21 hotels), and the Village Hotels Portfolio, comprising 33 hotels. The agency said such major portfolio deals were the key driver of investment volumes, largely the result of a number of exits by major owners of larger platforms for strategic reasons meeting the market of opportunistic funds seeking large-scale acquisitions. In contrast, the single-asset or core-plus market has seen sellers holding out for higher prices. London accounted for 55% of major deals by volume. However, outside London, volumes reached approximately £1.8bn. US and European investors contributed more than 70% of the total volume. Cushman said further deployment of international capital is also anticipated in the second half of this year, owing to relatively greater political and economic clarity with the conclusion of the general election. Yields generally remained stable in the first half of 2024, with slight compression for top-tier deals in markets with high barriers to entry. Upmarket and upper-upmarket hotels continue to attract the most investment, reflecting a focus on high-quality assets. Ed Fitch, head of hospitality for the UK and Ireland at Cushman & Wakefield, said: “Hospitality continues to prove itself a robust performer, with strong top-line growth and easing cost pressures, and this in turn continues to attract investor interest. The sector is on track to record very healthy transaction volumes in 2024, driven by a handful of key portfolio deals which have been hard to come by in recent years. “There is a great depth of capital waiting to get into the hospitality sector, which Cushman & Wakefield expects to sustain deal momentum throughout the year and into 2025 as more product which meets the criteria of that capital comes to market.” Photo © Vojtech Bruzek/Unsplash