Savills News

2024 investment volumes for European hotels to be significantly ahead of last year, says Savills

According to Savills latest research, investment volumes for European hotels this year are expected to significantly surpass 2023’s numbers.

Spain overtook the UK in 2022 to become the largest hotel investment market in Europe, says the international real estate advisor. However, the UK regained its crown last year, recording €2.62bn of hotel transactions, marginally ahead of the €2.61bn in Spain.

This was driven by a marked increase in UK activity in the final quarter, helped by a reduction in borrowing costs and, with it, improved investor sentiment. With more than €1bn of UK hotel assets having already transacted this year, full year volumes are expected to surpass 2023 levels.

Savills European Investor Sentiment Survey 2024 also shows significant appetite amongst investors to increase their allocation to Hospitality over the next three years. Survey respondents expect to deploy c.€10 billion in that period alone, in particular targeting Serviced Apartments, Lifestyle Hotels and Mid-Market Hotels.

In Portugal, the nation stands as a pioneer in shaping the tourism of tomorrow, prioritizing sustainability and curating tourist experiences of exceptional value. In 2023, the Hospitality sector emerged as the leading contender in real estate investments, boasting approximately 570 million euros in capital infusion. Remarkably, 83% of this funding originated from international channels, underscoring Portugal’s global appeal and allure to investors worldwide.

Richard Dawes, director in the Savills EMEA hotels team, says: “In the second half of 2023, investment activity exhibited promising signs of recovery, marked by consecutive quarterly increases. Regional volumes surged by 20% quarter-on-quarter during Q3, a noteworthy development given that Q3 traditionally experiences subdued activity. This momentum has continued with stronger Q1 2024 volumes in several key markets across the region.”

Marie Hickey, director Savills research, says: “With demand across a number of European hotel markets still in recovery mode, there remains significant support for further occupancy growth, which will underpin rates and help drive top line performance.

“While private buyers and owners/operators were particularly active in 2023, and will continue to be so this year, we also expect mid-cap private equity and institutions to make a return in 2024, supported by the relative appeal of the Hospitality sector, strong demand fundamentals, operational performance, and the pressure to deploy capital.”

Charlie Bottomley, director, Savills Capital Advisors, Debt Advisory, says: “The debt markets will play a large role in shaping the investment landscape for European Hospitality in 2024. Correctly navigating the debt environment will present opportunities for those able to adapt their approach, and as the sector continues to adjust, careful monitoring and strategic decision-making will be essential for sustained growth and profitability in 2024.”

Luís Clara, Capital Markets Associate at Savills Portugal, highlights: “Over the next two years, more than 80 new hotels are due to open in Portugal, resulting in a total supply of more than 7,900 beds spread across the country and promoted by major international brands. This year, the hotel segment is expected to maintain its dynamism, based on excellent operational performance, which will keep the country on the route of international investors and hotel brands.”

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