European hotel deals up 85% on 2014, says JLL

European hotel transactions surged 85% in the first half to €13.2 bn, primarily driven by the UK which accounted for nearly 50% of all hotel deals in the region, new research from agent JLL shows.

Half-year volumes for hotels in the UK reflect an increase of 172% on the previous year. In Germany, sales rose 60% to €1.4 bn.

The first half of 2015 has seen a significant number of single-asset and portfolio transactions. The largest portfolio deal to date was the sale of 18 Accor hotels in Germany as part of a sale and franchise-back deal to Event Hotel Group for €150 mln while the Marriott Hotel in Munich was just one of handful of single-asset deals to complete during H1.

Private equity and investment funds, particularly from North America, continue to actively target European hotel investment opportunities.

In H1 2015 UK regional portfolios proved particularly attractive to North American private equity and investment funds having transacted over €1.1 bn (57% of all regional UK portfolio deals in the UK) during this period.

Lone Star Funds has been the most active investor in the UK having spent over €1.7 bn on more than 13,000 rooms in London and regional locations already this year.

'It is of little surprise to those in the market that private equity and investment funds are continuing to target European hotels. This is a market where yield and visitor base is consistently strong and we are now seeing this type of investor further gather in confidence and start to look beyond the major city hubs and invest in periphery markets and in regional centres,' said Christoph Härle, CEO EMEA JLL Hotels & Hospitality.

Chinese capital entering Europe

EMEA is also seeing an influx of Chinese capital enter the market.

'A red-tape-laden approval process for overseas investments previously hindered Chinese investors investing more than $100 mln overseas. But since China’s Ministry of Commerce has changed the rules, they have effectively changed the game,' explained Härle.

Earlier in the year JLL predicted that in 2015, Chinese capital would represent some $5 bn in global hotel investment. 'In EMEA so far we have already seen $1.9 bn invested by Jin Jiang for the Louvre portfolio and we expect to see more deals before the year is out,' he added.