European Hotel Investment Volume Still Riding High

For the 12-month period ending in the first quarter of 2019, lodging transactions totaled €23 billion ($25.7 billion), with trades in the U.K., Spain and Germany accounting for the bulk of the activity.
Grosvenor House, London. Image courtesy of Marriott International

The investment community’s fondness for Europe’s hotel sector remained strong over the last 12-month period, resulting in investment volumes totaling €23 billion, or approximately $25.7 billion, according to CBRE’s, new report, European Hotel Investment MarketView Q1 2019.

According to the report, a continuation of the buoyant demand for alternative investments and operational real estate sustained the relatively high investment volumes observed in the European hotel sector. Activity in the U.K., Spain and Germany helped maintain the high investment volumes. The U.K. saw €8.2 billion (approximately $9.2 billion) in hotel transactions during the 12 months ending in the first quarter of 2019, marking a year-over-year increase of 15.1 percent. Notable deals included Covivio’s, (formerly Foncière des Régions) $1.1 billion acquisition of a 14-property U.K. portfolio, and Qatar Investment Authority hotel division Katara Hospitality’s purchase of the historic Grosvenor House in London for $600 million.

Spain, Europe’s second largest hotel investment market, saw transactions totaling €4.2 billion ($4.7 billion) during the 12-month period ending in the first quarter of this year. Germany recorded €3.9 billion ($4.2 billion) in trades. The transactions constituted a year-over-year increase of 17.5 percent and 7.1 percent in Spain and Germany, respectively. Growth in key European markets such as the U.K. and Spain reflects the strength of the hotel sector and demonstrates continued demand for alternative investments and operational real estate, according to Paul Collins, head of hotel investment properties for the U.K. & Ireland at CBRE.

Rising on the radar

In France, hotel investment activity dropped 0.6 percent to just €1.3 billion ($1.4 billion) during the year ending in the first quarter of 2019, but it was enough to push the country up to fourth on the list of Europe’s largest hotel investment markets. And while investment volumes totaled well below half-a-billion dollars in Portugal and Switzerland, the countries recorded the highest year-over-year increases, with a respective 346 percent and 209 percent in growth. Looking ahead at the European hotel markets in general, Collins said that 2019 is off to a strong start, following a record year for hotel investment.