Deals in the UK hotel sector had reached nearly £5bn by the end of the third quarter of 2018, according to the latest findings by Knight Frank.
It marks an increase of 27% on the same period in 2017. The agency said portfolio activity has dominated hotel deals in the year-to-date, totalling £3.1bn (56%) of investment.
Regional portfolio investment transactions have come to £2.2bn so far this year, outstripping deal values in London.
This in turn has led to an increase of more than 50% in average price per room sold outside London, to around £150,000. A larger proportion of corporate, full-service hotels transacting in the mid-market and high-end sectors contributed to the rise.
Knight Frank said it expects hotel transaction volumes for the full year to rise by more than 15%, with its full-year forecast close to £6.5bn.
Philippa Goldstein, hotel analyst at Knight Frank, said: “The diverse range of portfolio sales is evidence of the demand for quality hotel stock.
“Furthermore, London in particular is benefiting from a growing number of long-term investors, with experience in the cyclical nature of the hotel market, who are using their know-how to invest in prestigious, quality single-asset hotels.
“The London hotel business remains buoyant, the continued devaluation of sterling and London’s established position as one of the world’s leading hotel markets continues to drive visits to the city.
“Despite the average price per room transacting in London remaining static – at around £306,000 per key – investor confidence has shown little sign of abating, irrespective of Brexit and the weight of the new hotel supply entering the market.”
Major portfolio deals completed so far in 2018 include Starwood Capital’s disposal of its 13-strong Principal Hotel Group, including two De Vere hotel assets, for £858m to Foncière des Régions, and Lone Star’s exit from the UK hotel sector, after selling its remaining Amaris hospitality portfolio and operating platform to LRC Europe for £600m.
Other significant transactions include Apollo Global Management’s disposal of its 20-strong Holiday Inn and Crowne Plaza portfolio, netting £742m, and Brookfield’s £430m purchase of the SACO Group, representing the largest serviced apartment deal in the UK.
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