London is the most attractive hotel investment destination in Europe, according to a new survey of senior hospitality industry figures by Deloitte.
More than half of respondents attending the 26th Deloitte European Hotel Investment Conference today ranked the UK capital ahead of Paris (33%), Barcelona (30%) and Amsterdam (23%).
However, some 52% said London was overvalued, with 45% saying it was fairly valued.
European hotel transaction activity is expected to be dominated by international investors underpinned by North America (58%), China (53%) and the Middle East (52%) in 2015 and continued low interest rates will reinforce traditional bank debt as the core financing option.
Against the backdrop of a stagnant European economy, upscale hotels (33%) are the preferred product segment.
Nick van Marken, global head of hospitality at Deloitte, said: “There is significant appetite for hotels in Europe and the UK in particular. In recent months, US private equity buyers have taken advantage of low interest rates and a strong uptick in sentiment.”
He added: “Some valuations from two or three years ago have more or less doubled, so a number of buyers have done very well. It is easy to say in hindsight that these acquisitions were done at the right time, but real kudos should go to those who had the courage, got in and did deals even in the darkest days. Now, many will be rewarded if they get out at the right time. Some of those who missed the exit and held on may also be rewarded.”
Outside London, respondents favoured Scottish cities as those of most interest in the UK.
Edinburgh (60%) and Aberdeen (38%), followed by Manchester (33%) and Bath (19%) were considered most attractive.
“The regions have benefitted from a series of high-profile international events and a return of corporate and meetings demand resulting in double-digit RevPAR growth,” said Van Marken. “The strong upturn in rate is very promising albeit a return to pre-crisis profitability levels is yet to be seen.”
