Total European hotel transaction volume fell by 69% in the year of the pandemic following a record high the previous year when €27bn-worth of hotel deals were struck.
Total European hotel transaction volume reached €8.5 billion in 2020, representing a fall of 69% on 2019 (see Chart 1), which was the previous market peak at €27.1 billion.
Even so, 2020 figures remain significantly ahead of those seen in the Global Financial Crisis, with 2009 seeing only €3.1 billion in transaction volume.
Highlights
- 48% of the total 2020 transaction volume occurred in the first three months of the year, primarily representing transactions that were agreed pre-pandemic;
- Single assets accounted for €5.5 billion or 65% of the 2020 total, decreasing 54% from 2019, though significantly above the previous 2009 volume trough of €2.0 billion;
- Portfolio assets transacted at a total volume of some €3.0 billion (35% of the total), decreasing by 80% from 2019, although, again, this was significantly above the previous 2009 volume trough of €1.1 billion;
- This 65:35 split between single asset and portfolio volume for 2020 represented a significant shift in favour of single assets as compared to 2019 (45:55) and was slightly less balanced than the ten-year average split of 55:45. This was mainly due to a significant decrease in high-value portfolio transactions in 2020;
Chart 1: Total Hotel Investment Volume 2008-20
Source: HVS – London Office
- All investor types except High-Net-Worth Individuals posted overall declines in acquisitions. Real Estate Investment Companies contributed the most capital at €2.1 billion (-72% on 2019). The largest net sellers were Hotel Operators, with net disposals of €454 million. REITs were the only category of investors that posted positive net volumes, at €499 million (+1%);
- The UK maintained its leading role within Europe, reaching a transaction volume of €2.1 billion/£1.8 billion, which is a decline of 61% on 2019 (€6.2 billion/£5.5 billion). Germany was not far behind, recording total investment volume of €1.7 billion, a 57% drop on 2019;
- London posted the highest investment volume of any city in Europe at €1.6 billion/£1.4 billion in 2020 (-27% compared to 2019), ahead of Munich at €501 million (+15%), Paris at €312 million (-51%), Berlin at €223 million (+43%) and Rome at €193 million (+3%);
- Moving into 2021, we expect to see the full and substantial effects of the COVID-19 pandemic, with no ‘pre-pandemic’ acquisitions boosting the first half of the year, and then the effects of increasing distressed debt and opportunistic investors vying for footholds ahead of the anticipated European hotel market recovery.
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