European Hotel Transactions 2006

Having already shifted from ‘top gear’ into ‘overdrive’ in 2005, frenzied hotel investment markets headed ‘into orbit’ last year.

"2006 saw an increased number of portfolio transactions, dominated by the Hilton International/Hilton Hotels Corporation ‘remarriage’ for €4.8 billion and the continuing trend for sale and leaseback and sale and manageback transactions", notes co-author Elke Geieregger. Notable examples were disposals by InterContinental Hotels Group (24 hotels for €352 million), Accor (76 hotels for €583 million) and Starwood (six hotels for €762 million).

Overall, investment values surged from roughly €15 billion in 2005 to more than €20 billion in 2006; portfolio transactions accounted for 71% of the volume, as the hotel investment arena became a more global marketplace. In regard to single assets, the average price per room transacted rose from €208,000 in 2005 to €246,000 last year.

Looking at 2007 and beyond, co-author Karen Smith, a director of HVS, raises the question of the sustainability of this ongoing buying frenzy and analyses some early signs.

"Will we look back in 12 or 24 months’ time with hindsight and comment on how the signs of a market stabilisation were there, and wonder why we missed them?", she muses.

The survey provides an ongoing history of hotel sales from 1998, discusses the highest-priced per room sales of 2006, identifies the year’s top buyers and sellers, and provides a listing of sales that occurred in 2006, with a comprehensive review of the following.

• European single-asset hotel transaction activity - 2006;
• European portfolio hotel transaction activity – 2006;
• Profile of investors;
• Cross-border activity;
• Conclusions and outlook for the hotel investment community.

Copies of the European Hotel Transactions 2006 report are available free of charge from HVS, 7-10 Chandos Street, Cavendish Square, London W1G 9DQ, or via http://www.hvs.com.