Press Release - European Hotel Transactions 2003

HVS International's London Office has published its latest European Hotel Transaction Review, which details single asset and portfolio transactions that took place during 2003.
HVS International’s London Office has today published its latest European Hotel Transaction Review, which details single asset and portfolio hotel transactions that took place during 2003. A number of clear trends are highlighted by the 2003 survey:
  • Despite the continued decline in RevPAR in the majority of European hotel markets in 2003, single asset hotel investment activity changed pace considerably compared with 2002. HVS International recorded 91 single asset hotel transactions of above €7.5 million, totalling approximately €3.1 billion, just 3% below the record high of approximately €3.2 billion in 2001;
  • HVS International recorded 14 portfolio or company transactions, which represented approximately €3.5 billion, a 7% increase on 2002. This level of activity remained in a different league to the unprecedented volume achieved in 2001 of €8.8 billion;
  • overall, HVS recorded a 21% increase in total investment activity in 2003 compared with the previous year, to approximately €6.6 billion. Hotel investment activity was fuelled by a significant number of opportunistic acquisitions, as well as non-traditional hotel investors seeking to diversify their property portfolio and acquire higher-yielding investments;
  • Despite the difficult trading conditions in recent times, the average price achieved per room has remained relatively static, decreasing by approximately 3% since 2001 to approximately €175,000 per room. Due to historically low interest rates, reduced gearing and limited supply growth in many markets, there have been few distressed sales;
  • By reviewing the types of buyers active in the European hotel market, investment capital is available through a wide variety of sources. Trade buyers continue to dominate the single asset investment market, with investment in 2003 totalling approximately €1.5 billion; meanwhile, private equity dominates portfolio activity, with investment during 2003 of approximately €1.9 billion;
  • The representation of non-specialist buyers is likely to strengthen in 2004, due to their continued desire to build increasingly diversified portfolios, geared towards higher yielding investments.
Commenting on the results, Philippa Bock, an associate with HVS International and one of the report’s authors said, “Although the European operating markets remain volatile, the overall consensus is that the tide is turning and the outlook for the European hotel investment market is strong.” “We envisage that 2004 will witness a significant volume of both single asset and portfolio activity, with total investment significantly greater than that experienced during the past two years,” added co-author Bernard Forster, a director of HVS International. Total Hotel Investment Volumes 1998-03 (€ millions)
Source: HVS International Research
The report provides a comprehensive review of the following:
  • European single asset hotel transaction activity – 2003;
  • European portfolio hotel transaction activity – 2003;
  • Sources of Investment Capital;
  • Exit Strategies;
  • Debt Finance.
Copies of the European Hotel Transaction 2003 report are available free of charge from HVS International by clicking here. ### For further information, please contact: Philippa Bock, Associate Tel: +44 20 7878 7738 Mobile: +44 7956 351 198 Bernard Forster, Director Tel: +44 20 7878 7719 Mobile: +44 7801 234 908 Russell Kett, Managing Director Tel: +44 20 7878 7701 Mobile: +44 7802 411 142 16 March 2004