* European hotel transactions down 21 pct in 2012
* Hotel executives, industry experts see pick-up this year
* Easier access to financing boosts investments
* Wealthy gulf investors eye trophy assets
By Victoria Bryan
BERLIN, March 7 More hotels are expected to
change hands this year, with transaction volumes returning to
pre-crisis levels thanks to easier financing and wealthy Gulf
buyers on the hunt for trophy assets in key locations in London
Total European hotel transaction volume reached 5.6 billion
euros ($7.3 billion) in 2012, a drop of 21 percent from 2011,
and well below the 10-year average since 2002 of 9.5 billion,
according to a report by HVS Hodges Ward Elliott.
Hotel executives and industry specialists said financing was
becoming more available and buyers and sellers were keen to get
busy after several quiet years.
"There are early signs that this will be the strongest hotel
transaction year since before the crisis," Starwood CEO
Frits van Paasschen told Reuters, citing low interest rates,
less uncertainty regarding the euro zone and U.S. fiscal crises
and pent-up demand.
"Deals have not doubled or trebled, but they have definitely
picked up," said Nick Skea-Strachan, real estate partner within
the Hotels Group at law firm Berwin Leighton Paisner (BLP).
While many hotel companies have been shedding assets in
recent years to focus on generating revenue from management fees
instead, they do still have properties to sell.
Two of the most hotly awaited deals are the sale by
Intercontinental, the world's largest hotelier by rooms,
of its Park Lane hotel in London and the 1920s New York Barclay,
both of which have been valued at analysts by $300-$330 million.
Talks on the New York Barclay, which has welcomed guests
including Ronald Reagan, Marlon Brando and Bette Davis, fell
through last year, but Intercontinental CEO Richard Solomons
told Reuters that had almost played to the group's advantage.
"It's taken a bit longer, but if anything, the market's got
better during that time, so we'll be in a good place to do a
deal on that," he said.
He declined to comment on potential buyers, saying only that
there were interested parties from countries outside of the
United States and Britain.
With a Qatari investor having snapped up the
Intercontinental in Cannes last year for a reported 450 million
euros, many expect continuing interest from wealthy Gulf-based
investors in 2013.
In Britain, Park Lane's reputation as the most coveted
Monopoly board square is reflected in the real world among super
wealthy individuals seeking a property, according to law firm
"It's about getting a trophy asset," said John Sipling, head
of BLP's Abu Dhabi office. "They may get better, more solid
returns with a glue factory for example, but it's not got the
same cachet when you want to show your friends around."
Marc Socker, senior director of hotel fund management at
Invesco Real Estate, said flagship luxury properties like Park
Lane, would probably sell for a yield of around 5 percent.
That compares with above 6 percent for a well located
Novotel, Hilton or Mercure in a primary city, and around 7-7.5
percent for secondary locations.
The Ibis Hague city centre hotel, for example, was earlier
this week sold for 15.5 million euros, reflecting a gross yield
of approximately 7.36 percent.
Investments in hotels were also being driven by a lack of
deals in other parts of the real estate market, Socker said,
drawing in institutional investors like pension funds and
insurance companies. "The hotel sector is becoming a bit more
mainstream," he said.
ROOM AT THE INN
Outside of the big cities, Hilton is also planning to
offload four regional hotels in the UK, including in Blackpool
and Milton Keynes.
"We're gauging interest and we've already had early
indications of some significant interest," Simon Vincent, the
group's EMEA head said, adding that the group would look at a
sale either as a portfolio or individually.
As the assets are in second-tier cities, he expected
interest from specialist regional investors or businesses
looking to add to their existing portfolio.
The big hotel chains also announced a series of development
deals this week, highlighting growing optimism in the sector.
Intercontinental said it had signed a deal to develop 15 new
Holiday Inn Express hotels in Russia by 2019, doubling its
estate there. Hilton said it was opening 10 new mid-range hotels
in Germany and Austria.
Starwood, meanwhile, said it would open 50 new hotels in
Europe over the next five years and Marriott International
said it was launching a new low-cost brand, Moxy.
Marriott CEO Arne Sorenson told Reuters he was expecting a
record number of hotel transactions for the group this year
after it signed deals during 2012 to add almost 60,000 rooms.
"Those are signed binding contracts with hotel owners and
franchisees, and we are guessing we will see similar kinds of
numbers in 2013," he said.