Nick van Marken, global head – advisory, travel, hospitality & leisure at Deloitte, said: "Some recovery in the UK hotel transaction market was apparent in 2011, mainly in the second half of the year, and this has continued in 2012. Single asset transactions dominate and London remains the focus for most investors. The lack of readily accessible debt financing remains an on-going constraint and has made it difficult to close on large portfolio deals in particular."
Portfolio transactions made up around 30% of total deal activity during H1 2012, compared to 70% in 2011. The most significant transactions were the acquisition of the freehold interest in six Principal Hayley hotels by Principal Hayley Group, and their subsequent sale and leaseback to Pramerica.
Single asset deals continue to be dominated by London where pricing remains strong. These included the sale of the partly-completed InterContinental at Westminster; the Hilton Southbank site and The Hoxton and Crowne Plaza in Shoreditch; highlighting the continued high level of interest in the capital. Outside of the capital, distressed sales dominated the market with notable transactions including the sale of two von Essen assets (Cliveden and the Royal Crescent in Bath) and the Crowne Plaza Cambridge.
A combination of flat revPAR and uncertainty as to the profile of any recovery – notably profit – continues to hamper the transaction market.
The buyer community for regional assets included high-net-worth individuals and property companies (such as London & Regional and Topland), as well as trade (Hand Picked Hotels and Britannia).
Looking forward to the prospects for the market in the H2 2012, van Marken said: "We may see more portfolio deals coming to market and certainly several possible transactions are being mooted. This said, difficulties in accessing debt funding and the continued disparity between buyer and seller in terms of price expectation mean disposal processes are likely to continue to be longer and more difficult to complete. The market will continue to favour cash buyers or those not totally reliant on bank financing to close a deal."
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