Spain surpassed the UK as Europe’s primary market for hotel investment in 2022, as noted by the global property advisor. The UK, however, reclaimed the top spot the following year with hotel deals amounting to €2.62 billion, just barely outdoing Spain’s €2.61 billion.
There was a considerable uptick in UK hotel market activity towards the end of last year, spurred by lower borrowing costs and enhanced investor confidence. Given that over €1 billion in UK hotel properties have been sold already this year, it’s expected that the annual total will exceed that of 2023.
According to Savills European Investor Sentiment Survey 2024, there’s a strong inclination among investors to devote more to the Hospitality sector within the next three years. They plan to invest around €10 billion during this time, focusing specifically on Serviced Apartments, Lifestyle Hotels, and Mid-Market Hotels.
In Portugal, the country leads the way in creating the future of tourism, focusing on sustainability and delivering top-tier tourist experiences. The Hospitality sector led real estate investments in 2023, attracting nearly 570 million euros, with an impressive 83% coming from international investors, reflecting Portugal’s worldwide magnetic pull.
Richard Dawes, director in Savills’ EMEA hotels team, points out that 2023 saw a rebound in investment activities with increases in each quarter. A 20% jump in regional volumes in the third quarter was particularly noteworthy, given the typical slowdown during that period. The first quarter of 2024 is already showing strong numbers in many important markets.
Marie Hickey, director of Savills research, suggests that the potential for occupancy growth remains substantial across several European hotel markets, which could bolster rates and overall financial performance.
Private buyers and operators were especially active in 2023 and are expected to stay that way this year. Mid-cap private equity and institutions are also predicted to make a comeback in 2024 due to the hospitality sector’s attractive qualities, solid demand, operational success, and the pressure to invest available funds.
Charlie Bottomley, director at Savills Capital Advisors, Debt Advisory, highlights the significant influence debt markets will have in shaping the European Hospitality investment scene. Adapting to the debt environment will create opportunities for those prepared to modify their strategies, and careful monitoring and strategic planning will be key for continued growth and profitability in 2024.
Luís Clara, Capital Markets Associate at Savills Portugal, notes that over 80 new hotels are set to launch in Portugal within the next two years. With more than 7,900 new beds from major international brands, the dynamism of the hotel segment should remain strong, sustaining Portugal’s appeal among international investors and hotel chains.
