New European hotel transaction data from Cushman & Wakefield reveals that the first half of 2020 saw a marked increase in investors retreating to their home regions amid Covid-19-related uncertainty, with 78% of the recorded €5.7 bn in transactions (a year-on-year fall of 55%) originating from within Europe.
Data from Cushman & Wakefield’s Marketbeat: Europe Hospitality H1 2020 shows that some 79% of the deal volume was agreed before the Covid-19 outbreak.
However, a number of notable deals were still struck after the pandemic outbreak, totalling €1.2 bn, confirming that some investors remain confident about the long-term prospects of the hotel sector.
Jonathan Hubbard, head of hospitality EMEA at Cushman & Wakefield, commented: 'The hotel sector across Europe has been hit hard by Covid-19 lockdowns, which have understandably resulted in a sharp drop in investment volumes as investors take stock and await signs of a trading recovery.
'However, investor sentiment for the sector remains positive for the medium term and the transactions that have occurred demonstrate this confidence.'
Examples of key transactions, with the final price agreed post-Covid-19 lockdown, include the acquisition of the 136-key Ritz London by a Qatari investor, and the purchase of the 304-room nhow hotel in Berlin by Swiss-listed Eastern Property Holdings.
Most active
The most active buyers were institutional investors (48% of total volume transacted), a group that typically has better access to capital, strong financial capability to withstand temporary challenges and frequently a longer-term investment strategy, according to the research.
The average price per room has increased by approximately 26% to €239,000 compared to €189,000 per room in 2019. This can largely be attributed to the changing nature of hotels sold in H1 2020, which has focused on prime assets in core locations, Cushman & Wakefield said.
Despite a notable decline, the UK remained the highest volume market for hotel investment in H1 2020 (€1.8 bn) by virtue of the sale of the Ritz which represented nearly half of total deal volume. Germany recorded the second highest transaction volume (€0.9 bn) and was also the most active market with the highest number of properties and rooms sold.
Spain, taking third place, was one of the few countries to record investment volume growth, up by 52%. The €220 mln acquisition of the Madrid Edition hotel by Archer Hotel Capital impacted this.
Two major resort transactions in Greece also boosted regional figures, including the sale of a resort portfolio comprising 1,094-rooms on Crete to a joint venture between Henderson Park and Hines. The 990-room Porto Carras resort on the Halkidiki central peninsula was acquired in April 2020 by Belterra Investment for €200 mln.
Hubbard concluded: 'With a very uncertain trading outlook in the short term, many well capitalised investors are holding out for pricing adjustments or some distressed sellers to unlock more upside in their acquisitions and this is likely to be a feature of the market in H2 2020.'
