Total 2021 UK hotel investment volumes hit £4.14bn, an 84.3% jump on 2020 volumes and just shy of the 15-year average of £4.22bn.
According to research from Savills, this surge was fuelled by £1.42bn of transactions in Q4.
Investment in the regional UK hotel market increased considerably in 2021, reaching £2.04bn, more than 570% of 2020 volumes. Private equity capital, both domestic and international, accounted for 62.9% of hotel investment, reaching £1.28bn.
Notable deals include Goldman Sachs’ acquisition of West Midlands golf resort The Belfry Hotel & Resort for around £140m in November, and Zetland Capital Partners’ acquisition of the Macdonald Manchester Hotel and Macdonald Holyrood Hotel in November 2021.
Key portfolio transactions include Henderson Park’s acquisition of a portfolio of 12 hotels under Hilton brands (Project Conrad) in September; Marathon Asset Management’s acquisition of 17 Holiday Inn and Crowne Plaza branded hotels (Project Horizon) from Cerberus in May; and Blackstone’s acquisition of Warner Leisure Hotels as a part of the wider Bourne Leisure transaction in February 2021.
In London, overseas investors accounted for 44.7% of 2021 volumes, including deals such as Singaporean based Fragrance Group’s acquisition of the Holiday Inn Kensington Forum in December.
Total 2021 hotel investment volumes in London were £2.10bn, up 11.0% year-on-year, while the number of transactions rose 68.4% over the same period, reaching 32.
“There is a demand-supply disconnect in the market today and while 2021 transactions volumes showed an impressive rebound from 2020 levels, the continued relative lack of available hotel stock compared to the volume of capital waiting to be deployed suggests this imbalance will be an ongoing challenge in 2022,” said Rob Stapleton, head of UK hotel capital markets at Savills
“However, the new year has started with positive momentum and we are preparing to launch a number of new hotel instructions to market in the coming weeks, which we anticipate will be well-received.”
Savills acted on the two largest single-asset transactions of 2021, claiming almost 20% of market share in terms of total investment volume.