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UK hotel transactions slumped to a total of £3B in 2022, 27.5% lower than 2021, according to international real estate adviser Savills.
The downturn was the result of slowing activity driven by macroeconomic conditions in the second half of the year, the company said.
Investment volumes in the first half were up 16.9% year-on-year and 61% lower in the second half year-on-year, as rising debt costs and a weakening economic outlook caused activity to slow.
Notable deals in 2022 include Tristan Capital Partners' acquisition of Point A Hotels from Raag Hotels for approximately £420M; Fortress Investment Group’s acquisition of Prem Group; and KSL Capital Partners acquisition of The Pig Hotels Group from Home Grown Hotels, both deals for an undisclosed price, Savills said.
"These platforms all offer significant scope for expansion and sit in the highest-performing and most resilient segments in our industry,” Savills Director Head of UK Hotel Capital Markets Rob Stapleton said.
Activity outside of London proved to be relatively more resilient, driven by the staycation market, with year-end volumes of £2B, a drop of just 2.1% year-on-year, Savills pointed out.
“While the second half of the year [2022] has been challenging in terms of transactional activity, we are seeing stability starting to return to the market as we begin the new year," Savills Head of UK Hotels Tim Stoyle said.
"There are approximately £500M worth of hotel assets expected to complete in January that we are aware of, which would be a positive start to the year and marks the intentions of investors as they look to deploy capital into attractive opportunities. Additionally, the business rate revaluation that comes into effect in April 2023 will provide some respite to hotels.”
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