Nery Alaev writes about the hotel industry in Europe.
Private Equity Investors have sold off their assets earlier than expected, thanks to strong demand for acquisitions from international organisations looking diversify their portfolios – this is one issue that will potentially effect Europe’s hotel sector in the coming year.
I’ve decided to look further into the news and examine other issues that may affect the sector.
Surprise sales
Commenting on the recent trend of investors selling their hotel assets on before the standard investment time-frame, Russell Kett of HVS said:
A Hilton hotel in London
“Some [investors] have already shown their desire to sell the hotels they have only recently acquired – well before the usual five to seven-year time normally sought. The trend towards early checkout will continue as long as there is a queue of investors still seeking to acquire hotels and portfolios.
The recent sale of Malmaison and Hotel du Vin by KSL Capital Partners to Singapore-based Frasers Hospitality after only two years is a good example”
Mr. Kett’s comment and the example used shows that there is clearly a hunger for such properties from investors across the world. One must wonder why this is.
New normals
The appetite for hotel properties in Europe may be a result of declining levels of safety in holiday destinations such as North Africa and Turkey.
The comparative safety of Europe (even though it’s seen a fair share of danger itself), is potentially attractive to investors who are concerned about investments in unsafe places.
Russell Kett comments that:
“The propensity to travel should recover quickly, but not before resort locations in Spain, Italy, Greece, the Adriatic, Cyprus and Malta continue to benefit from displaced demand from North Africa and Egypt.”
In summary, the hotel sector and hospitality industry at large faces challenges in 2016, how these challenges will shape the market remains to be seen.
Nery Alaev
Nery Alaev is the current Director of ESN Investments GmbH, which engages in acquisition and development of commercial and residential property in Germany and Austria.