Jones Lang LaSalle’s Global Hotel Investor Outlook 2013 shows that the UK remains the leading market for hotel investment, attracting 37 per cent share of EMEA hotel investment volume in 2013. Trading and sentiment has improved and market confidence has been boosted by a number of key global investors underwriting the U.K. market through portfolio acquisitions and refinancings, notably the Abu Dhabi Investment Authority (ADIA), Starwood Capital, KSL Capital Partners and Mount Kellett. The report forecasts that a continued sell-down of over leveraged assets in control of the lenders and disposals by private equity funds reaching the end of their life-cycle, will bolster hotel investment volumes by 20 per cent in 2014. This will also be aided by the increasing appetite of UK domestic banks such as RBS, Lloyds and Barclays, as well as overseas banks such as the Bank of China and a number of Middle Eastern banks, to lend to the hotel sector.
Revenue per available room (RevPar) in London is expected to rise by c.4 per cent in 2014, a more positive result than 2013 when London trading was impacted by additional supply and by comparison to the Olympic year. An additional 45 properties, with approximately 6,000 rooms, are set to enter the London market in 2014. 60 per cent of these are within the budget sector and will continue to challenge trading performance. Regional U.K. hotels are also expected to see some top line growth although the challenge here remains at the profit level, with costs often increasing faster than revenue. However, the speed of GDP growth should underpin business confidence and drive rate growth through a shift in room segmentation.
Jonathan Hubbard, CEO Northern Europe for Jones Lang LaSalle’s Hotels & Hospitality Group, said: “The familiarity and maturity of the UK will provide good opportunities for investors in 2014 and will drive more value. As a result of this, we will see competition heating up and investors that miss out on the prime core market opportunities will start to focus on the secondary markets in those countries where they will tap broader opportunities and better returns. It’s a very positive picture for the EMEA region and particularly for London and the UK.”