The European hotel market will see a significant slowdown in the second half of 2007 compared with the first six months, according to Mark Wynne-Smith, ceo of Europe at Jones Lang LaSalle Hotels. 'This will guarantee that 2007 will not outstrip the record investment volume registered in Europe last year, although it will be closer than I thought to last year's figure,' said Wynne-Smith. In 2006, hotel transaction volumes increased by 44% year-on-year. Wynne-Smith does not see the 2007 figure deviating much from the record $26.8 bn registered a year earlier.

The European hotel market will see a significant slowdown in the second half of 2007 compared with the first six months, according to Mark Wynne-Smith, ceo of Europe at Jones Lang LaSalle Hotels. 'This will guarantee that 2007 will not outstrip the record investment volume registered in Europe last year, although it will be closer than I thought to last year's figure,' said Wynne-Smith. In 2006, hotel transaction volumes increased by 44% year-on-year. Wynne-Smith does not see the 2007 figure deviating much from the record $26.8 bn registered a year earlier.

The first half of 2007 saw a 'disparity' in the hotel sector's performance across Europe, said Wynne-Smith. The UK, which has been leading the market so far this year, is forecast to decelerate through the rest of 2007. Due to rising UK interest rates, returns will flatten and deals will be harder to finance in the second half. 'On the other hand, Paris has had a tough first half of the year but is expected to speed up in the coming six months, while the German market is expected to continue to perform well through this and next year,' said Wynne-Smith.

The European market slowdown is due not to a lack of demand, said Wynne-Smith, but to 'lack of product'. He continued: 'There is new supply, but not enough to keep up with demand. Barcelona and Madrid are different once again, because here the supply pipeline is increasing. Across Europe, most real estate has already been sold off, and much product traded at the beginning of the year was already put on the market in 2006.' Wynne-Smith said the average transaction size will be smaller in 2007 but there will be an improvement in traded portfolios. 'Companies will not be buying entire portfolios but picking up the hotel assets they really want', he added.

On a global scale, the hotel sector will continue to boom, said Wynne-Smith. Global investment once again surpassed market expectations in the first half of 2007, after rising 63% to $ 72.5 bn last year. Both globally and in Europe, hotel transaction volumes in the first half exceeded last year's record figures. The pace of investment is expected to continue globally through the rest of the year, Wynne-Smith predicted.

Commenting on the recent takeover of Hilton Hotels by private equity group Blackstone for $ 26 bn, Wynne-Smith said that 'the deal could lead to more consolidation in the sector over the coming months.' Hilton Hotels will be pursuing an aggressive real estate acquisition strategy in the near future. According to Wynne-Smith, Blackstone made the offer for Hilton because of its potential in the European and Asian markets: 'Blackstone will try to gain more exposure in these two continents'.