Hotel sector M&A activity to rise strongly

Volume of purchase deals may increase by 25% in Europe in 2011

Much more merger and acquisition activity is forecast in the hotel sector in 2011 as rising room rates and occupancy levels encourage real-estate investors reassess the values of hotel properties. One chief broker quoted at the International Hotel Investment Forum in Berlin said he expects a 15 to 20% increase in accommodation-sector purchases to around $30 billion this year. The volume of deals will increase the most – by as much as 25% – in Europe and the Middle East/Africa regions.
Hotel executives in Berlin for the annual ITB show are confirming the sector is rebounding strongly, particularly as a surge in business travel fills more rooms. Most of the purchase deals over the last year have been in the luxury sector. But “in 2011 we will see more deals with what we describe as secondary type assets,” said one executive, as banks persuade hoteliers to sell properties that are outside city centres. The number of future deals could also be driven by emerging markets.
[pictured: Ballroom at Le Richemond, Geneva, which was sold last year]