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Who’s Buying in the Hotel Property Market?

Private investors are stepping away from the European hotel market, with institutional money increasingly taking their place.

Private Investors Step Back

Private investors contributed substantially less to the hotel market in 2016 compared to 2015, a trend that allowed institutional investors to increase their buying activity, according to the recent Hotel Investment Outlook Report by JLL published in January, 2017.

Philip Ward, EMEA CEO of JLL’s Hotels & Hospitality group, said: “Transaction volumes by institutional investors made up 20% of market share, four times the proportion seen in 2015 and these buyers are expected to remain key players in the UK and EMEA market.”

UK Volumes Increase

Despite investor fears over Brexit, hotel sales in London are expected to rise. From 2016 to 2017, figures are expected to increase from $20.5 billion to $22 billion.

Much of this increased demand for commercial hotel and inn sales opportunities will come from Chinese capital as part of its search for trophy assets in major global markets, such as London, New York and Paris.

Ward added: “Despite geo-political issues, terrorism and economic volatility, the tourism and hospitality industry has shown resilience and travel remains on the increase.

“While London remains in the top spot of desired hotel investment destinations, the lack of available product for sale and the gap between buyer and seller expectations has drawn investors to key regional markets and this is evident through the significant increase in transaction activity in Birmingham and Manchester.”

As management companies and brands aim to boost performance due to falling RevPar, JLL expects to see M&A activity and further consolidation across the sector.