HNWs Driving Buoyant European Hotel Market

Chris Owen

23 August 2007

Portfolio transactions represented 72 per cent of total investment at €6.5 billion at the half-year mark, and high net worth individuals have surpassed private equity players as the dominant investor group in European hotels. According to a new study by Jones Lang LaSalle Hotels, the European hotel investment market has proved buoyant with transaction volumes reaching €9 billion at the half year mark, compared to €9.3 billion in the first half of 2006. Mark Wynne-Smith, European chief executive of the hotel advisory group, said: “We have seen a marked decrease in the number of private equity buyers this year; they currently have a market share of 23 per cent, down on last year’s figure of 43 per cent. Private equity investors generally have shorter investment horizons and are therefore more sensitive to increases in the cost of borrowing. “High net worth individuals on the other hand have been the dominant investment force so far this year – they account for over one third of all hotel purchases, over four times the amount at the same period last year. “In addition, institutional investors have become increasingly active buyers this year raising their market share to 17 per cent in the first six months compared to 5 per cent in 2006,” added Mr Wynne-Smith. Whilst private equity investors remained active buyers in the European hotel market, said the study, they also became the dominant vendors, disposing of eight times the volume of hotels during the first half of 2007, compared to first half 2006. They accounted for almost one third of all sales, whilst hotel operators still accounted for over half of total sales. Jones Lang LaSalle Hotels, a part of the Jones Lang LaSalle real estate services group, comprises a global team of 210 hotel experts, in 24 dedicated offices. Sister company, LaSalle Investment Management, has $39.5 billion of assets under management.