Savills forecasts strong European hotel investment in 2024 surpassing last year
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Image generated with AiIn 2022, Spain took the lead as Europe’s largest hotel investment market, according to the international real estate advisor. However, the UK reclaimed its position last year with hotel transactions totaling €2.62 billion, slightly edging past Spain’s €2.61 billion.
This shift was fueled by a notable surge in UK activity during the last quarter, aided by reduced borrowing costs and a consequent boost in investor confidence. With over €1 billion in UK hotel assets already traded this year, it’s anticipated that total volumes for the year will surpass those of 2023.
The Savills European Investor Sentiment Survey for 2024 also reveals a strong interest among investors to increase their allocation to the hospitality sector over the next three years. Respondents to the survey plan to invest approximately €10 billion during this period, focusing particularly on serviced apartments, lifestyle hotels, and mid-market hotels.
Richard Dawes, director in the Savills EMEA hotels team, says: “In the second half of 2023, investment activity exhibited promising signs of recovery, marked by consecutive quarterly increases. Regional volumes surged by 20% quarter-on-quarter during Q3, a noteworthy development given that Q3 traditionally experiences subdued activity. This momentum has continued with stronger Q1 2024 volumes in several key markets across the region.”
Marie Hickey, director Savills research, says: “With demand across a number of European hotel markets still in recovery mode, there remains significant support for further occupancy growth, which will underpin rates and help drive top line performance.
“While private buyers and owners/operators were particularly active in 2023, and will continue to be so this year, we also expect mid-cap private equity and institutions to make a return in 2024, supported by the relative appeal of the Hospitality sector, strong demand fundamentals, operational performance, and the pressure to deploy capital.”
Charlie Bottomley, director, Savills Capital Advisors, Debt Advisory, says: “The debt markets will play a large role in shaping the investment landscape for European Hospitality in 2024. Correctly navigating the debt environment will present opportunities for those able to adapt their approach, and as the sector continues to adjust, careful monitoring and strategic decision-making will be essential for sustained growth and profitability in 2024.”
