According to Savills, €16.1bn was invested into the European hotel sector in 2021, an increase of 61% yoy. This was driven by an increase in transactional activity across a number of major European markets, namely Spain, Italy and UK, where volumes were up 211%, 122% and 84% respectively.
Savills recorded that this momentum continued into Q1 this year, where total European volumes totalled €3.5bn, up 29.9% on Q1 2020. While yoy growth for Q1 was very positive, it does reflect a slowdown on previous quarters, with Q2-4 2021 averaging 141% growth yoy. Savills attributes this in part to buyer and vendor uncertainty in January in response to the Omicron strain of Covid.
Investment volumes recorded in 2021 were 14.8% below the long term pre-pandemic annual average of €18.9bn, indicating a positive trajectory for market recovery, which is in line with the recovery in international visitor numbers across a number of European markets. For example, international visitor numbers to Spain in February 2022 were 28% below equivalent 2019 levels
Key deals completed in Europe over the last 12 months have included:
- The Holiday Inn Kensington Forum which, with 906 bedrooms, is the largest single asset deal to transact, and sold for c. £355m
- The Grand Hotel in Stockolm, which sold for €355.4m
- Project Conrad (12 UK Hilton-branded hotels) sold for £555m
- Selenta ESP Hotel Portfolio 2021 (a chain of four Spanish hotels) sold for €440m
Richard Dawes, Director, Hotels team, Savills EMEA, comments, “We expect investment activity to continue with selective yield compression in parts of the market, while shifts in financing costs, rising utility and staffing costs and the Ukraine crisis tempering some activity in other parts of the market.”
“Despite this, 2022 looks to be the year that operational recovery will become more entrenched across Europe’s key destination markets as international visitors return, demonstrated by certain markets outperforming relative periods in 2019 already. This, and the longer term fundamentals driving demand, means that investor appetite for European hotels will endure, despite the current headwinds.”