Chinese investors are set to increase their share of global hotel acquisitions, as UK visitor numbers from the mainland continue to rise, alongside the real estate market's improvements.

Chinese investors are set to increase their share of global cross border hotel acquisitions from the current level of 4 per cent to 10 per cent by 2017, according to the latest UK hotels bulletin from international real estate advisor Savills.

The firm revealed that the Asia Pacific regions and the UK, namely London, are set to benefit the most from this growing investment in line with the expansion of overseas Chinese tourism, a statement said.

Chinese investors have spent approximately £1.6 billion ($2.61 billion) outside of their domestic market over the last five years, according to statistics from Real Capital Analytics. As such, Savills predicts there may be further Chinese investment in the form of direct investment into individual hotel assets, as the momentum of wider real estate and infrastructure investment continues into the UK and is supported by visitor growth. This is based on growing demand from Hong Kong and Chinese Hotel groups looking to establish their own brands in the UK in order to capitalise on the growth in Chinese visitors, the firm said.

"The faster growth in independent Chinese travellers to the UK means that location and reputation will become increasingly more important when selecting accommodation providing opportunities for Chinese operators to enter the UK market. However, we suspect that this is unlikely to be on a large scale. While there will be operators, particularly in the upscale sectors, that will make the leap into UK and European markets, for the Chinese budget and midmarket brands the initial focus is likely to be on the wider Asia Pacific region,” said Marie Hickey, associate director of research at Savills.

To date, Hong Kong and mainland Chinese purchasers have acquired approximately 18 hotels and hotel development sites in the UK over the last five years spending close to £450 million, the firm said, estimating that activity could more than double with annual average volumes in excess of £200 million over the next three years.

This development could be boosted further by the proposed streamlining of visa regulations for Chinese visitors to the UK, which could bring visitor numbers to 650,000 per year, according to VisitBritain. 

“This growth in numbers would initially benefit large budget hotels in the city fringe locations, which are most popular with tour groups,” the firm said.

However, it also added that Chinese travellers will become increasingly more sophisticated and in turn their reliance on tour group travel will diminish and as such, the popularity of budget and mid market hotels in core locations will rise, in particular amongst those international brands that are already established in mainland China such as IHG, Accor and Starwood.