Potential Blackstone Group hotel sale reflects growing European demand

DoubleTree by Hilton Hotel London - Tower of London

Anonymous sources are suggesting that Blackstone Group, the world’s biggest private-equity property investor, plans to sell hotels operated under Hilton Worldwide Holdings’ DoubleTree brand in London, Dublin and Amsterdam for about $1.1 billion. Blackstone is Hilton's biggest shareholder, owning about 46 percent of the hospitality company’s shares.

One source claimed that real estate broker Eastdil Secured will sell the DoubleTree by Hilton at the Tower of London, valued at about $510 million, and will work with CBRE Hotels to sell the Amsterdam assets, valued at about $378.7 million, on behalf of Blackstone. In Dublin, Savills is handling the sale of the former Burlington hotel, valued at about $200.5 million.

Blackstone, Hilton, CBRE and Savills all declined to comment.

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Europe's Strong Spots

While these sales have not yet been confirmed, they would be a logical result of recent trends in Europe's hotel sector. According to a report released earlier this month by CBRE Hotels, investment into European hotels reached €3.7 billion in the first quarter of the year, representing the second-largest deal volume recorded in any first quarter in the past decade. This achievement was in spite of transaction volumes falling 30 percent compared to Q1 2015. Lodging deals in the region rose 79 percent to €23 billion in 2015, CBRE reported.

And the U.K.'s hotel industry is expected to present "significant market opportunities" through the break-up of portfolios and increasing sale and leaseback activity, global property consultancy Knight Frank reported earlier this week. Investment volume in hotels set new benchmarks last year, accounting for 8.29 percent of total U.K. commercial real estate volume at £5.89 billion in 2015.

But the first quarter of 2016 was not so rosy for the U.K.'s hotel sector, which saw transaction turnover decline by 58 percent year-over-year. Joe Stather, information and intelligence manager EMEA at CBRE Hotels, noted last week that the “Brexit” and the uncertainty surrounding the potential departure of the U.K. from the European Union is having some impact on owners thinking about taking their properties to market this year. "They feel if there’s sufficient risk, which would put investors off, they’re less likely to bring their property to market because they don’t feel there will be the same competitive landscape in terms of bidding and therefore they won’t get best price," Stather told HOTEL MANAGEMENT. "Also, for investors, people are waiting for the outcome of the referendum before they commit capital into the U.K. landscape." 

So while investors seem to be taking a wait-and-see attitude, the UK's immediate future could certainly be bright. In particular, London's hotel industry is poised for increased demand. The city set a new tourism record after more than 30 million visitors came to the city last year. A record 31.5 million Great Britain residents and international tourists came to the city in 2015, an increase of 20 percent compared to numbers from five years ago. Figures released last week by the Office for National Statistics, International Passenger Survey, reported 18.6 million international visits in 2015 compared to 17.4 million in 2014, a previous record year, for an increase of 7 percent. 

As a whole, visitor arrivals to Europe rose 5 percent in 2015, reaching a record 609 million visitors, according to a report from the UN’s World Tourism Organization released in January. 

Sources: Bloomberg, Business Times, Irish Times

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