UK Hotel Investment Reaches £3 Billion in First Half of 2024

Major Transactions Boost Investment

An analysis from property consultancy Knight Frank reveals that hotel investment in the UK reached a remarkable £3 billion during the first six months of 2024. This substantial figure is attributed to several significant portfolio transactions.

Among the most notable deals were:

• Blackstone’s Acquisition: An £850 million purchase of the 33-strong Village Hotels portfolio.
• Starwood Capital Group: An £800 million deal for 10 Radisson Edwardian Hotels in London.
• Landsec’s Disposal: A £400 million sale of its hotel portfolio to Ares Management.

Comparison to Previous Years

The investment total for the first half of 2024 represents a significant increase compared to the same period in 2023, where investment was £990 million. Despite this substantial growth, the current figure remains 10 percent lower than the pre-pandemic level recorded in the first half of 2019.

US Investors Lead the Charge

US investors have been the primary drivers of transaction volume, accounting for an impressive 77 percent of the total UK investment activity. London has been the focal point, with approximately 70 percent of the investment concentrated in the capital.

Market Outlook and Future Expectations

Henry Jackson, partner and head of hotel agency at Knight Frank, expressed optimism about the sector’s direction. He noted, “The direction of travel for the sector is positive, and the volume of portfolio transactions is evidence that the sector remains attractive. An increase in the quality and the number of hotels seeking to transact is expected, as hotel owners who have extended their investment cycles now seek to realize their exit strategies. Where a particular asset meets all the investment criteria, we have seen certain buyers willing to pay full prices for these assets.”

Jackson also highlighted the strong pipeline of hotels currently in the legal process, suggesting that the momentum will continue. He added that a potential interest rate cut could further boost optimism for investment in the UK hotel market.

Increased Pressure on Owners

Knight Frank’s analysis suggests that stakeholders are exerting increased pressure on hotel owners to bring assets to the market at deliverable levels, facilitating more timely sales. This trend indicates a dynamic and active market, with expectations of continued robust investment activity in the sector.

Conclusion

The first half of 2024 has demonstrated a strong rebound in the UK hotel investment market, driven largely by major portfolio transactions and significant contributions from US investors. With a positive outlook and ongoing high levels of activity, the sector appears well-positioned for continued growth.