Hospitality Market Trends & Data

EUROPEAN HOTEL MARKET BEAT 2023

Final Quarter Boosts European Hotel Deal Volumes.
A strong final quarter saw European hotel transactions reach nearly EUR 17 billion last year, according to new data from Cushman & Wakefield.

Across the year, 787 properties were sold comprising 106,000 rooms and totalling EUR 16.9 billion in value. This remains significantly below 2019 levels but is only 4% short of the 2022 total. In the last quarter, volumes reached EUR 5.4 billion, a 13% increase relative to Q4 2022 (EUR 4.8 billion).

Several major individual deals drove these volumes, including the sale of the Westin Paris Vendome, the Center Parcs Allgäu in Germany, the Six Senses Hotel Rome, the Mandarin Oriental and Hotel Sofia in Barcelona, and Haymarket House in London (office to hotel conversion).

According to the research, portfolio transactions represented one third of the 2023 total volume (vs. 28% in 2022 and 45% in 2019). Most of these portfolio transactions were completed in the last quarter of 2023, representing more than half of the volumes transacted (56% in Q4 2023, vs 31% in 2022 and 35% in 2019).

Spain, France, and the UK were the most active markets, accounting for 59% of European volumes in 2023 with a total of EUR 10 billion (+7% vs 2022). Among the top-10 markets, Spain, France, and Greece witnessed the largest growth relative to 2022, with an increase of 44%, 26% and 23%, respectively. In terms of the key urban markets, London, Paris, and Madrid continue to be on the top of the list for investors followed by Barcelona and Rome. 

Learn more about the initial findings by downloading the report.

MARKETBEAT– UK: FULL YEAR 2023

In 2023, the UK hotel sector continued to demonstrate resilience amid challenges, showing significant growth in key performance metrics. Across the year, London in particular witnessed a boom in new development projects with office-to-hotel conversions particularly popular. Investment volumes reached £2.4bn, experiencing a 28% decrease from 2022 levels, albeit this is less of a decline than other commercial real estate asset classes. Over £0.5bn of this investment aimed at converting offices to hotel. Yields showed a nuanced landscape, softening by 75-100 basis points YoY, anticipated to gradually sharpen by late 2024 due to base rate movements. We expect an increase in deal activity in 2024, driven by refinancing events and a narrowing bid:ask spread.

For the full UK Market Beat, download the report.

OPERATOR BEAT – EUROPE 2023

Findings from the Cushman and Wakefield Operator Beat 2023 indicate that capital cities throughout Europe continue to hold their allure for operators, with the recent addition of Vienna to this esteemed list. Notably, City markets in France, Germany, Benelux, and Turkey have experienced a surge in operator interest since 2021.  

The Operator Beat surveys were conducted among over 195 senior executives of leading hotel operators active in Europe. The surveys were carried out in H1 2023 across nine different markets: the Iberian Peninsula, UK & Ireland, France, Benelux, Italy, DACH, CEE, SEE, and Turkey. 

Learn more about the initial findings by downloading the report. 

THE HOTEL INVESTMENT SCENE IN CEE 2023

Welcome to our fourth edition of the joint Cushman & Wakefield–CMS report on the Hotel Investment scene in CEE*: Getting Real about ESG in Hotel Real Estate. 

In recent years, the hotel sector in CEE has endured a very volatile period. Starting with the pandemic in 2020, followed by Russia’s unprovoked invasion of Ukraine in 2022, and consequent economic challenges underpinned by the energy crisis and sharp increase in overall inflation. Not surprisingly, this had a detrimental impact on hotel performance and investment activity across the region, as described in this report. However, the hospitality industry is resilient and able to rebound quickly. The recovery is already underway and has surpassed most expectations. Hotels across the CEE region are showing robust performance, already exceeding pre-pandemic levels in many markets.  

*CEE-6 countries comprise the Czech Republic, Slovakia, Poland, Hungary, Romania and Bulgaria. 

Learn more about the initial findings by downloading the report. 

MARKET BEAT – Europe: H1 2022

Hotel transaction volume across Europe reached just over €7 billion during the first six months of 2022, with 319 properties changing hands. Despite the strong recovery of travel demand and the wall of capital looking for opportunities, transaction activity remained flat compared to the same period last year, with investor appetite constrained by rising financing and operating costs, fears over consumer confidence and a lack of willing sellers.

However, a slightly different picture is portrayed at the country level, with several markets recording notable growth in transaction activity. The following are the key highlights across the top-5 European markets:

• UK – With almost €2 billion of transacted volume, the UK remained the most active hotel investment market in Europe during the first half of 2022 (+40% compared to H1 2021). Investors have shown continued confidence in the UK core markets, with several notable portfolio deals being closed, such as Tristan’s acquisition of a majority stake at Point A Hotels and KSL’s investment in Pig Hotels UK (brokered by Cushman & Wakefield). However, transaction activity has slowed in the last 2 months, as the gap between buyer and seller expectations widens.

Read the full UK Market Beat for H1 2022 here.

• Spain and Italy –The rising popularity of resorts among investors, as well as the continued attractiveness of major gateway cities with a strong leisure appeal, resulted in an approximately 50% increase in hotel investment activity in both Spain and Italy during H1 2022. This was supported by several significant deals such as the sale of Hotel Princesa Plaza in Madrid and 7Pines Resort in Ibiza in Spain or Rosewood Castiglion Del Bosco and Hotel Majestic in Rome (brokered by Cushman & Wakefield).
  
  
• France - Despite the rising cost of financing, macro-economic and geopolitical concerns, the strong attractiveness of the Parisian hotel market and the popularity of resorts has allowed for healthy growth of transaction activity in France during H1 2022, reaching nearly €930 million (+10%). Noteworthy deals include Club Med Alpe d'Huez, Club Med Grand Massif Samoëns Morillon, and Crowne Plaza Paris Neuilly (brokered by Cushman & Wakefield).
  
  
• Germany – With about €730 million of transaction volume during H1 2022, Germany stands among top-5 most active markets in Europe. However, compared to the same period last year, the country recorded about a 36% decline due primarily to a marked increase in debt costs. In addition, the recent spike in prime office yields has begun to impact hotel pricing, holding off sellers from putting their assets on the market. Furthermore, the market for forward deals has slowed as developers are battling increased construction costs, supply chain disruptions and financing obstacles. Nevertheless, Germany is experiencing a relatively active M&A market, with ongoing consolidations in the hotel operating market (although not recorded as a real estate transaction).

Overall, the top-5 European hotel markets in H1 2022 (UK, Spain, Italy, France, and Germany) accounted for about 81% of transacted volume, compared to 68% in H1 2021. Buyers seem to be retreating to the safety of core markets, with transaction activity slowing down notably in the rest of Europe (-41%). This cautiousness among investors, reflecting the economic and geopolitical uncertainty and the difficulty in securing financing in less liquid geographies, is likely to continue in the coming months until confidence recovers, or more distressed opportunities come to market.

For the full European Market Beat, download the report.

HOTEL INVESTORBEAT – Europe: H1 2022 

The survey was conducted by Cushman & Wakefield during April and March 2022. It was completed by 56 respondents, including senior representatives of major private equity firms, funds, REITs and other institutional investors active in the European hotel real estate market. The respondents’ firms invested in aggregate over EUR 20 billion during the last five years (2017-2021), accounting for about a fifth of all hotel transaction volume in Europe. Download the findings.

Key findings - Hotel investment sentiment 

• Despite the unprecedented impact of the pandemic on global tourism, investors believe in the future of the hospitality sector in Europe, with most investors intending to deploy more capital into European hotels than before the pandemic.
• European urban gateways remain on the top of investors’ radars, with Paris, London, Amsterdam, and Madrid leading the way. Nevertheless, investors are also optimistic about the leisure destinations expecting them to fully recover already by 2023.
• Rising construction and utility costs are the top concerns for investors. On the other hand, respondents seem less concerned about market liquidity and operator/tenant uncertainty both being mostly considered as low or non-existing challenges.
• 3-9% is the premium expected by investors for hotel properties with the highest ESG certifications (on average).

Contact us for further insights and analysis.