Cautious investors put brake on hotel deals

Hotel deal activity cooled by more than a third in the first half of 2019, as investors adopted a more cautious approach.

That's according to new analysis by accountancy firm PwC, which found that the total volume of hotel deals over the period was £2.6bn. That was 35% down on the same period in the first half of 2018.

PwC said it expected investment from Europe and the Far East to continue in the remainder of the year, thanks to the relatively low value of the pound, which has fallen since voters opted to leave the European Union in the 2016 referendum.

Nonetheless, it said it expected the total deal volume for the year to be around £5.1bn assuming the completion of some reported current deals. That would represent a 28% decrease compared to 2018.

PwC pointed to Brexit as a cause for investors' caution and warned that even if a deal were secured before the end of 2019, there it would still take some time before stability was regained and investors' confidence returned. It is expecting 2020 hotel transactions to continue to fall slightly to around £4.8bn.

Sam Ward, UK hotels leader at PwC, said: "What we have seen in the first half of the year has been a more cautious approach by investors which has been dictated by the uncertainties of Brexit becoming more acute, ongoing volatility in the market and weakened business sentiment. Portfolio transactions are down more than a third in comparison to the same period last year and single asset transactions are down more than a quarter.

"Until there is further clarity on Brexit we expect the cautious approach to investment to be reflected in the second half of the year. Even if a Brexit deal is secured by the end of the year, it will take some time before stability returns."