According to HVS’ latest annual European Hotel Transaction Report, hotel transactions for 2022 totaled €13.3bn ($14.4bn USD), an 18% fall on the previous year as the impact of the Russian invasion of Ukraine, rising energy and food costs and high interest rates hit investor confidence.
Portfolio sales dropped 25% on the previous year, with total volume at €4.5bn ($4.9bn), with London seeing the highest level of portfolio deals.
The post-COVID era was expected to have been a story of strong recovery in the hotel investment market. However, the Russian invasion of Ukraine in February 2022, which fueled huge increases in energy and food prices, overall inflation and therefore interest rates, resulted in a mixed picture for hotel transactions for the year. Total volume in 2022 fell short of 2021 by 18%, with 37 fewer transactions. Prices per room achieved higher levels on average than in 2021, led by significant price increases in portfolio transactions.
HVS reports Real Estate Investment Companies were the most active investors in 2022, being both the largest buyers and the largest sellers of hotels by volume. Private Equity firms were the second-most-active sellers, with Institutional Investors being the second-most-active buyers.
Institutional Investors were also the largest net buyers in 2022, acquiring €2.0 billion ($2.2bn USD) more than they sold. The largest net sellers were Undisclosed, with more than €2.3 billion ($2.5bn USD) in disposals, followed by High-Net-Worth Individuals with €1.4 billion ($1.54bn USD) in disposals. European groups accounted for 73% of total hotel transactions in 2022.
Investment Volume by European City
Some major European cities attracted substantially more investor attention than they did in 2021, contributing to their respective countries’ growth in 2022:
- Madrid climbed to second place, behind London, with a total volume of €498 million ($548 million USD, a 23% increase on 2021), with deals such as the hotel Princesa Plaza Madrid. Paris, where volume increased by an impressive 49%, rising from sixth place in 2021, followed Madrid in third place;
- Italy’s single asset hotel prices recorded an average of €560,000 ($616,000 USD) per room (+60%), which was driven by several high-profile acquisitions, including the Rosewood Castiglion del Bosco resort in Tuscany. Rome, in particular, saw a volume increase of 883% versus 2021, including the transaction of the W Rome, lifting the Eternal City to the fourth-highest transaction volume of any European city in 2022;
- Both Amsterdam and Brussels returned as top investment markets in 2022, recording the fifth- and sixth-highest single asset volumes of any European city in 2022, says HVS.