The European hotel sector faces a challenging year in 2010, but hotel transactions should increase due to improved economic conditions, an increased flow of distressed assets coming to the market and growing investor confidence, according to the latest research carried out by BNP Paribas Real Estate into the UK and European hotels market.

The European hotel sector faces a challenging year in 2010, but hotel transactions should increase due to improved economic conditions, an increased flow of distressed assets coming to the market and growing investor confidence, according to the latest research carried out by BNP Paribas Real Estate into the UK and European hotels market.

Last year, hotel investment volume in the top five European markets fell by 50% to EUR 2.7 bn, the real estate adviser said. The UK was the most affected of the top five European markets, with volumes down 60% at EUR 669 mln compared with 2008. However, the UK remained the most active amongst the top five markets accounting for 25% of total volumes.
France represented 24% of total volumes and remained the second-most active market with total investment of EUR 646 mln, a 55% fall from 2008. The German market also saw a drop of 55% with investment volumes of EUR 446 mln, followed by Spain and Italy which both saw investment volumes fall by 25% and 24% to EUR 543 mln and EUR 396 mln respectively.

The chain penetration rate in the UK reached 43% in 2009, an increase of 7% with chains such as Premier Inn and Travelodge continuing their expansion. Moreover, the UK is set to benefit in anticipation of the Olympic Games in 2012 with London having the biggest hotel pipeline in Europe with approximately 5,800 rooms out of the 100,000 currently being developed across Europe.