UK hotel investment volumes reached circa £1.7bn in Q1 2024 – a 138% increase on Q1 2023 and the highest level since Q1 2019, according to new data from Cushman & Wakefield.
In Q1 2024, 93 properties changed hands providing circa 7,600 rooms. London accounted for 60% of major deals by volume, with the most notable acquisition being the sale of the iconic BT Tower to MCR Hotels.
The sale of the Edwardian UK Radisson Hotel portfolio and the LXi REIT Travelodge portfolio, accounted for 60% of the transaction volume in Q1.
Private buyers accounted for 69% of deals completed, followed by public investors (23%) and institutional-backed capital (8%).
Ed Fitch, head of hospitality UK & Ireland at Cushman & Wakefield, said: “The last 18 months have seen the UK sustain elevated levels of hotel performance, which now appears to be stabilising as the new standard. The bid:ask spread continues to slowly narrow. There is strong capital interest in the sector, yet deal flow remains constrained by a lack of product on the market whilst buyers are adopting a wait-and-see approach anticipating base rate cuts in H2 2024, against the backdrop of an impending UK election.
“From a yield perspective, we see that they remain stable against those established at the close of 2023. Toward the back end of the year, a slow and steady sharpening in line with the gradual reduction in base rates can be expected, although reversion to historic lows of the 2010s is unlikely. The enduring ‘flight to quality’ continues to dominate the UK hotel investment, with 69% of deal flow amongst luxury and upper upscale hotel classes. This serves to heighten competition for opportunities in prime locations and maintain a consistently stringent yield environment for premium assets.”
