Hotel investors turn to Europe as economy improves

Financing for European hotels is becoming easier than ever: According to Business Day Live, investors are looking for better returns in a low-interest-rate environment, and economies are emerging from "bruising recessions," sparking optimism for the year.

"It’s the first time in five years that we’ve been able to say people are confident about deal flow and the availability of finance," said Karen Friebe of law firm BLP, which released a study showing 97 percent of hotel industry professionals expect revenue per available room to rise this year.

Hotel and leisure industry consultancy HVS London said total hotel transactions in Europe reached a value of €7.7 billion last year, 39 percent up from 2012 but still well below the €18.8 billion in 2007.

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Research by adviser Grant Thornton suggests about one in five hotel businesses plan to invest in new buildings this year.

InterContinental Hotels’ Europe head Angela Brav said the fact that deals were not being lost because of lack of access to capital made for "a refreshing change."

Starwood, meanwhile, signed 152 deals last year for franchised or managed hotels, a record for the group, thanks to the return of capital to the sector.

The London Hotels Team at Lloyds Bank wrote about £250m in new loans last year and could be interested in doing a similar amount this year.

"If the right deals are there, the bank would have the appetite to try to replicate" last year’s performance," said Tony Burnell of the Lloyds team.

But he said a lot more people were looking at the same market now, reducing the chances of finding the right deal.
 

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