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“As a result of this, we will see competition
heating up and investors that miss out on
the prime core market opportunities will
start to focus on the secondary markets in
those countries where they will tap broader
opportunities and better returns. It’s a very
positive picture for the EMEA region and
particularly for London and the UK.”
Hotel transaction activity across the UK
totalled around £0.8bn in the second half
of 2013, 66% higher than that reported in
se second half of 2012, according to
analysis by Deloitte.
JLL forecast that a continued sell-down
of over-leveraged assets, and disposals
by private equity funds reaching the
end of their life-cycle, will bolster hotel
investment volumes by 20% in 2014.
This will also be aided by the increasing
appetite of UK domestic banks such
as RBS, Lloyds and Barclays, as well as
overseas banks such as the Bank of China
and a number of Middle Eastern banks,
to lend to the hotel sector.
An additional 45 properties, with
approximately 6,000 rooms, are set to
enter the London market in 2014 – 60%
of these are within the budget sector
and will continue to challenge trading
performance.
JLL expects regional UK hotels to see some
top line growth although the challenge
here remains at the profit level, with costs
often increasing faster than revenue.
However, the speed of GDP growth should
underpin business confidence and drive
rate growth through a shift in room
segmentation.
Jonathan Hubbard, CEO Northern Europe
for JLL’s Hotels & Hospitality Group, said:
“The familiarity and maturity of the UK will
provide good opportunities for investors in
2014 and will drive more value.
Nick van Marken (below), global head of
hospitality at Deloitte, comments:
“The spotlight has returned to hotels as
an investment class, underpinned by a
clear market recovery and improved macro-
economics. The many portfolio deals that closed
in the first half laid a fantastic base and the
Hilton IPO at the end of the year underpinned
the increasingly positive market sentiment.”
In terms of single asset deals, London
continued to dominate, driven by an almost
insatiable appetite for hotel real estate.
Activity outside the capital continued to be
predominantly driven by distressed sales.
Looking at the prospects for 2014, van
Marken remarks: “We expect to see the
completion of a number of deals early this
year; including that of De Vere Venues,
and we expect the continued influx of
foreign capital.”