EUROPE Hotel investors holding out for H2 – C&W

As much as 78 pct of the recorded EUR 5.7 bln transaction volume (a year-on-year decline of 55 pct) originated from within Europe, states Cushman & Wakefield’s ‘Marketbeat: Europe Hospitality H1 2020’ report.

Around 79 pct of the deal volume was agreed before the pandemic, but several notable deals were still agreed after the outbreak, totalling EUR 1.2 bln, evidence, according to the authors of the report, that there still are investors confident about the long-term prospects of the hotel sector.

The most active buyers during the first six months of the year were institutional investors (48 pct of the total volume transacted), a group that typically has better access to capital, a stronger financial capability to withstand temporary challenges and who often have a longer-term investment strategy.

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. Nonetheless, 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.
Jonathan Hubbard, the EMEA head of hospitality at Cushman & Wakefield

Despite a significant decline, the UK remained the highest volume market for hotel investment in H1 2020 (EUR 1.8 bln), followed by Germany (EUR 0.9 bln) and Spain – one of the few countries to record investment volume growth, up by 52 pct. Greece also registered an increase in transactions, mainly due to two major resort transactions.

In contrast to many other European markets, no hotel transaction has been closed in Poland in H1 2020, despite several deals already having reached an advanced stage. Increased uncertainty among investors due to the Covid-19 pandemic was the main reason for the transactions being put on-hold or delayed. At the same time, it should be noted that the availability of hotels designated for sale was limited despite the strong investment demand, and that in 2019 the number of hotel transactions in Poland was already almost half that of the European average.
Łukasz Bondyra, a senior hospitality advisor at Cushman & Wakefield in Poland