07 Sep, 2017
European Hotel M&A Activity in 2016
European hotel deal activity reduced by nearly 10% to c. €19bn in 2016 — still the second highest level ever recorded. The UK’s share of total transaction volume fell from c. 60% in 2015 to only 25% in 2016 reflecting investor uncertainty surrounding the Brexit vote.
Meanwhile the «safe haven» of Germany accounted for nearly 30% of transaction volume in 2016. The 2016 transaction market also saw investment drawn to the growth in the Southern Mediterranean market destinations of Spain, Portugal, Italy and Greece.
The investment in hotel assets in the Nordics and Germany has also been driven by more favorable returns compared to other commercial real estate assets in these markets.
Despite the recent terror attacks in France, hotel deal volumes were maintained in 2016, mainly due to one significant portfolio deal (B&B Hotels) and two large Parisian single hotel asset deals (Le Meridien Etoile and Sofitel Le Faubourg).
Spain’s hotel market continued to experience significant investor interest — with high demand for both luxury assets, highlighted by the Hotel Villa Magna in Madrid attracting a record price of €1.2m per key; and distressed opportunities with a number of significant NPL (non performing loans) transactions.
There was an increase in transaction volume in Rest of Europe hotel assets compared to 2015 driven by demand from overseas investors who considered prime western European cities too expensive. With Greek authorities working with financial institutions to develop a framework to remove impediments from sales of distressed loans, we anticipate a greater level of hotel deal activity in Greece shortly.
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