European hotel transaction activity falls in 2020

hotel room

Hotel investment deal volumes declined dramatically in 2020 with a 63 percent fall compared with 2019 but there were still over €10 billion of deals closed.

The UK saw the highest volume of deals with €2.3 billion, down 58% on 2019, followed by Germany at €1.8 billion (-64%) and Spain at €1.2 billion (-20%).

Some smaller markets even saw increases. In Sweden, for example, transaction activity was up by about 5% compared with 2019. 

Across the whole of Europe there were nearly 400 transactions, comprising about 48,000 rooms.

“The hotel sector across Europe has been hit hard by COVID-19 lockdowns, which have understandably resulted in a sharp drop in investment volumes. However, the hotel industry is unique in that, for the most part, there is not a viable virtual pivot for travel and tourism – there will always be a need for hotel accommodation,” Jon Hubbard, Head of Hospitality EMEA at Cushman & Wakefield, said.

“Investors recognise this, and their sentiment for the sector remains positive for the medium to long term. The continued transaction activity in 2020 and the number of deals we are seeing in the pipeline reflect this confidence.”

Four 2020 Trends

Local investors: There was a substantial increase in European investors with the region accounting for 83% of transaction volumes.

Investor Type: Institutional investors, led the market with close to  half the volume.

Project stage: 26% of deal volume came from development or conversion projects up from 12% in 2019.

Location type: Over 41% of deals committed after the virus outbreak were outside urban locations. There was also an 87% decline in acquisitions of airport hotels.

“As we move through 2021 and vaccination programmes start to take effect and economies reignite, travel and going on holidays, whether domestically or abroad, will be front and centre of people’s minds,” Hubbard said.

“We’ve recently seen this in the UK, with spikes of enquiries to holiday companies following the publication of the British Prime Minister’s roadmap out of lockdown. With cities unlocking too, more business travel is set to be on the agenda and larger-scale events like conferences will follow. As Europe slowly emerges from this crisis, the desire for more face-to-face contact and quality leisure time will provide a significant boost for the hotel sector.”