If 2024 was the year in which hospitality further consolidated its position as a key asset class for real estate investors, as evidenced by notable acquisitions and sales, including the acquisition of the Grand Hyatt Athens by US fund Blackstone, it was also the year of Swiftonomics, sporting events and a two-half game for the European continent.
William Duffey, head of hotel and hospitality capital markets in JLL’s Europe, Middle East and Africa (EMEA) region, said: “There are clear signs that investors no longer see hotels as an alternative, but as a core asset class.”
Elaborating on the year’s highlights, Jon Hubbard, head of hospitality at Cushman & Wakefield’s EMEA region, said: “European hotel trading performance experienced a ‘Taylor Swift rebound’ in the first half of this year, with strong guest demand linked in part to major events taking place across the continent, including Euro 2024, the Olympics and Swift’s Eras tour.
Swift in particular managed to make some magical RevPAR, with a JLL report noting that RevPAR in destinations that hosted its concerts exceeded the global average by 490 basis points. Compared to 2019 data, the top five markets that saw the highest percentage growth globally during Swift’s tour included four European destinations, namely Edinburgh, Paris, Madrid and Milan.
Although Europe’s sporting events (Olympics and Euro) did not exactly cause the boom that hoteliers in Paris and Germany respectively had hoped for, investors continued to flock to key European cities.
The UK, Spain and France were the most active markets in terms of transaction activity in the first half of the year, accounting for over two-thirds of the European total, according to Cushman & Wakefield. While first-half volume reached over €11.6 billion, the highest six-month volume since 2019, most market watchers predict the sector will record up to €20 billion in deals by the end of the year.
Investors prefer southern Europe
2023 closed with trading data demonstrating investors’ preference for southern Europe over northern European markets, supported by strong performance in the leisure sector and the attractiveness of Spain, Portugal, Italy and Greece throughout the year.
While large individual asset transactions in 2024 continued to highlight these markets, a number of significant portfolio transactions in northern Europe suggest that investor ‘appetites’ are beginning to balance.
For example, Gruppo Statuto’s €200 million deal for the Six Senses Hotel Ibiza – a record for the island – underlined the attractiveness of the sun and the sea, but also transactions such as Mohari and Omnam’s €300 million deal for the five-star Bauer in Venice, or Castello’s financing of the Nobu Hotel Via Veneto in Rome. Banco Santander acquired a stake in three Meliá hotels for €300 million, while Blackstone bought the Grand Hyatt Athens for €230 million.
However, especially in the UK, there have been several portfolio deals, demonstrating international investors’ faith in the country’s long-term fundamentals. Starwood Capital entered into an £800 million deal with family-owned Radisson Edwardian Group for 10 hotels, with 2,053 rooms across the country, as well as signing a commitment to work together on further deals. The transaction increased the number of Starwood’s European hotels to 47, including around 10,000 rooms across the continent. JLL represented the seller.
Portfolio transactions
Pointing to the trend of large acquisitions, Ares Real Estate has acquired a portfolio of 18 UK hotels with 3,028 rooms from Landsec for £400 million. The portfolio comprises mid-market and economy class properties, with the majority of the value in central London and the remaining assets mainly located in major cities such as Edinburgh, Manchester and Birmingham.
Meanwhile, Scandinavian hotel owner-manager Pandox doubled its UK portfolio overnight when it acquired three aparthotels in central London for £230m.
Travelodge has acquired 66 Travelodge-branded hotels from its largest owner – LXi REIT – for £210 million, backed by owner GoldenTree Asset Management.
In early December, meanwhile, KKR and Baupost acquired 33 Marriott International hotels in the UK from ADIA. Alternative lender Cheyne underlined its belief in UK fundamentals as it lent Fattal £525m to refinance four London properties, namely NYX Hotel London Holborn, Leonardo Royal Hotel London City, Leonardo Royal Hotel London Tower Bridge and Leonardo Royal Hotel London St Pauls.
Another major portfolio deal was completed in the Netherlands, where Fattal entered into a 12-hotel deal for €360 million from KSL Capital Partners, signalling its intention to continue to expand its already significant presence in the Benelux region. Five of the hotels are located in Amsterdam, while the remaining seven are in the cities of Rotterdam, The Hague, Eindhoven, Groningen and Maastricht.
Fattal European Partnership, the European investment arm of the Leonardo Hotel Group, raised around €420 million last year for its third European hotel fund and says it is already ahead of its growth targets. Guy Vardi, co-manager of partnerships for hotel group Fattal, said: “Being an owner-manager gives us the ability to access transactions that the typical financial investor is not able to execute.”
In a sign that Central Europe is getting back on the deal table, CPI Property Group has sold a 50% stake in a subsidiary that owns eight hotels in the Czech Republic to Bratislava-based Best Hotel Properties.
Trading trends
Mr Duffey observes that hotel investors have clear preferences for low-budget or luxury hotels, while there is still some caution about the mid-market. He cites the Caledonian in Edinburgh, which rebranded as a Curio Collection hotel this summer after dropping the Waldorf Astoria brand.
Luxury deals this year included Morgan Stanley and Quinspark Investment Partners’ deal for the Pullman Paris Tour Eiffel from French REIT Amundi for around €350 million.
Also of note is the growing investor interest in the extended stay, branded residential and guesthouse categories, evidenced by significant deals this year. Accommodation specialist Greystar has entered into a three-asset deal in Spain in the extended stay category, which echoes Pandox’s purchase of an aparthotel in London.
In the mergers and acquisitions sector, Germany’s Motel One has passed back into the hands of its founder in a deal that values the company at €4.1 billion. However, other discussed transactions, such as the rumoured acquisition of citizenM, were not completed.
