The UK suffered a 58% year-on-year plunge in hotel investment volumes during 2020, but outperformed its peers in Europe.
According to the latest data from Cushman & Wakefield, the UK posted the highest volume of deals at €2.3bn (£2bn).
This was followed by Germany at €1.8bn, with volumes diving by 64% on the previous year, and Spain, where volumes dropped by 20% to €1.2bn.
Among the least impacted major markets were Sweden, Switzerland, Greece, Portugal and Spain. Sweden recorded a slight increase in transaction activity, up by around 5% compared with 2019.
Investment volumes declined 63% annually across Europe in 2020. Nonetheless, Cushman noted that just over €10bn of deals closed during the year, exceeding expectations.
The European hotel market recorded nearly 400 transactions, comprising around 48,000 rooms. Almost 43% of deal volume was committed after the pandemic outbreak.
European-based investors accounted for the vast majority of transaction volumes in the region (83%).
Institutional investors led the way in Europe, making up 48% of total volumes.
A third of transactions were located outside of major cities, increasing to more than 41% when including deals committed after the coronarvirus outbreak.
On the other hand, airport hotel acquisitions plummeted by 87%.
Just over a quarter (26%) of deal volumes involved hotels in development or conversions, as opposed to operating assets, more than doubling on 12% in the previous year.
Jon Hubbard, head of hospitality EMEA at Cushman & Wakefield, said: “The hotel sector across Europe has been hit hard by Covid-19 lockdowns, which have understandably resulted in a sharp drop in investment volumes.
“However, the hotel industry is unique in that, for the most part, there is not a viable virtual pivot for travel and tourism – there will always be a need for hotel accommodation. Investors recognise this, and their sentiment for the sector remains positive for the medium to long term.
“The continued transaction activity in 2020 and the number of deals we are seeing in the pipeline reflect this confidence.”
He added: “As we move through 2021 and vaccination programmes start to take effect and economies reignite, travel and going on holidays, whether domestically or abroad, will be front and centre of people’s minds.
“We’ve recently seen this in the UK, with spikes of enquiries to holiday companies following the publication of the British prime minister’s roadmap out of lockdown. With cities unlocking too, more business travel is set to be on the agenda and larger-scale events like conferences will follow.
“As Europe slowly emerges from this crisis, the desire for more face-to-face contact and quality leisure time will provide a significant boost for the hotel sector.”
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