Investments in hotel real estate are slowly recovering


The volume of investment transactions recorded in the hotel sector on European markets in the first half of 2022, reached similar level to the last year’s. The UK remains the most active market, followed by France, Italy, Spain and Germany.

Hotel assets in Western Europe enjoyed exceptional success before the pandemic. In 2019, the value of the transaction volume in this segment reached the highest annual level in history – EUR 27.1 billion (HNR Hotel News – European Hotel Transactions 2019 data). After a very good 2018, 2019 was a record year with a record high of 46 per cent increase in the value of transactions year on year.

In the first half of 2022, despite a significant revival in travel demand, the value of transactions in the hotel segment in Western Europe remained at a similar level as the last year. Investors are hampered by the growing costs of financing and maintaining the facilities, as well as the limited number of properties offered for sale.

Transactions in Europe

This year, Crowne Plaza BlackFriars in London, Adagio Aparthotel in Edinburgh (transaction value £ 40.5m), among others, found new owners on the British market. Tristan bought a majority stake in Point A Hotels, and KSL bought Pig Hotels.

In France, Pont Royal Paris hotel, Crowne Plaza hotel in Paris (EUR 100 million), Club Med. Alpe d’Huez hotel, Hotel Club Med hotel, Grand Massif Samoens Morllon hotel were subjects of transactions. In Switzerland, Hotel Schwanen located in Rappersiwil was the purchased for PLN 120 million.

In Italy, Grand Hotel & La Pace hotel in Montecatini Terme (30 million euro), Majestic hotel in Rome, and NH Milano Palazzo hotel in Moscova have changed their owners.

In Spain, Radisson Blu 1882 Hotel Barcelona (EUR 75 million), Hard Rock Hotel Madrid (EUR 65 million), Princesa Plaza Hotel in Madrid (EUR 175 million), 7Pines Resort Hotel in Ibiza (EUR 130 million) were purchased as well. Three hotels in Spain and the Netherlands were also acquired by Invesco Real Estate (EUR 100 million).

In addition, as part of a portfolio transaction, Engel & Volkers Asset Management purchased two Seven Pines hotels in Ibiza and Sardinia and the Schloss Roxburghe hotel in Heiton, Scotland for approximately EUR 280 million. Moreover, Premier INN hotel in Dublin, InterContinental Estoril Hotel in Lisbon (EUR 22 million) and Motel One Antwerp Site in Antwerp, Belgium have changed their owners.

– In Poland, since the purchase of the Regent Warsaw Hotel by PHN in February 2021, one of the few transactions was the purchase of the Hotel Metropolis Design hotel with 60 rooms located in Cracow at Wygoda street, which during this year’s holidays was purchased by the Israeli chain Fattal Hotels from Metropolis SA – says Katarzyna Tencza, Associate Director Investment & Hospitality at Walter Herz.

Investment brakes

Walter Herz points out that the profitability of hotels in Poland is declining. – Inflation makes maintenance costs grow faster than the prices of hotel services. Hence, hotels are not assets that investors are looking for today. Investment operations are stifled by drastically rising costs, mainly of energy, gas and services. The industry is facing a serious increase in gas prices, the price of which has gone up by over 300 per cent and electricity, which went up by about 200 per cent in one year. Therefore, it is with great relief that the industry has adopted the maximum energy tariff recently introduced by the government, which is to apply from December, 2022. For three years, investors have had difficulties in obtaining financing for hotel investments from the banks. In addition, with the current interest rates, the cost of financing is very high – admits Katarzyna Tencza, Associate Director Investment & Hospitality at Walter Herz.

– Increased interest in holiday locations translates into the prices of investment plots in popular resorts, which have gone up substantially. As much as 30 per cent over the last year. Few entities report a need for land for city hotels, but quite a large group of investors are looking for market opportunities – informs Katarzyna Tencza. – Increased activity in the hotel sector is directly related to the recently introduced facilitations in the implementation of PRS projects on land designated for retail and service. Investors planning to build apartments for rent are competing for plots with companies that operate on the hotel market – adds Katarzyna Tencza.

New properties in Poland

Although the number of hotel developments has significantly decreased over the last three years, new resort and city hotels are still entering the Polish market. Interestingly, the data from Statistics Poland shows that in 2021 the resources of the Polish market increased by over 8.5 thousand rooms. Almost twice as much as the average from recent years. Such a large increase in supply in the hotel sector has not been recorded since 2008. This is the effect of commissioning the facilities, the construction of which was delayed due to difficulties related to macroeconomic changes on the market.

According to Walter Herz, there are over 2 800 categorized hotels in Poland, including 84 five-star hotels, which offer a total of over 222 thousand rooms. The number of hotel facilities in Poland is growing. Five-star hotels have been built in Międzyzdroje, Wisła and Krynica Zdrój, which provide a standard that was lacking in these locations. A lot of new hotels have been opened in recent quarters, and the construction of more has been scheduled.

Announced projects

Radisson Hotel Group announces further expansion in Poland. This year alone, the Group opened Andersia Hotel & Spa Poznań in Poznań and Radisson RED Gdańsk on Wyspa Spichrzów island in Gdańsk. Over the next two years, the Group is planning to open 6 new hotels in Poland. One of the next facilities of this brand will be built, among others in Ustronie Morskie. Radisson Resort & Suites Ustronie Morskie, which will offer 187 apartments measuring up to 67 sq m. and 89 rooms is expected to open in 2025.

Hotel Gołębiewski in Pobierowo, located right by the sea, is also under construction, offering family rooms with an average size of 60 sq m. The opening of the complex has been postponed to the summer season.

In Gdynia, near Kościuszko Square, Allenortt Capital plans to build a four-star hotel. The construction is to begin in 2023. The hotel is to be completed in two years. In turn, a large hotel with 200 apartments is to be built in the spot of Poznań tennis courts.

ATENOR and Ennismore companies are planning on building TRIBE Warsaw Airport hotel in FORT 7 near Warsaw Chopin Airport. A new city hotel in Warsaw, the investor of which is Europlan company, will also appear under the Campanile brand. A new hotel facility will also be erected in Białobrzegi on the Pilica river. Construction works are to start this year.

In Poznań, Radisson Hotel Group wants to open the first hotel in Poland under the Radisson Individuals brand – Andersia Hotel & Spa Poznań, which will offer 172 rooms. Moreover, recently B&B Hotels chain celebrated the opening of B&B Poznań Old Town hotel located at Plac Wolności square, which is the largest facility of this brand in Poland.

In addition, Rafin company won the tender for the reconstruction of the historic Hatzfeld Palace located at Wita Stwosza Street in Wrocław. After the reconstruction, Marriott International hotel under Autograph Collection brand is to be built on this spot. Also, a five-star hotel called Altus Palace was opened this summer in the historic Leipziger Palace in Wrocław.

After a long break, the construction of the Hilton Garden Inn hotel in Radom has started. It is to be completed by the end of 2023.