IPD: Increasing interest in institutional hotel investment leads to enhancement of IPD Pan-European Hotel Performance report (EU)

The growing desire for diversification amongst property investors has led to a large upsurge in interest in the European hotel sector. The increase in investment has boosted the IPD sample by over €3 billion in the last year, and the index now measures over 400 hotels across Europe, worth over €10 billion.

According to Tim Smith, Director of HVS, "Despite the concerns over the euro, investors have continued to show interest in the key European markets – they are selective, but sensibly priced investments continue to attract interest from both existing and new hotel investors."

Graham Craggs, Managing Director of Jones Lang LaSalle Hotels, continued: "EMEA hotel transaction volumes reached an impressive €8.6 billion in 2011, a 10% increase compared to 2010. The continued development of the IPD Pan-European Hotel Performance Report should further improve market transparency and investor participation in the European Hotel sector."

Building on the success of the inaugural report released last year, IPD in association with AXA Real Estate, HVS, Invesco Real Estate and JLL Hotels have expanded the report to give an increasing insight into the performance of different types of European hotels.

For the first time, accommodation quality will be measured across the continent, to allow investors to the see the performance of leased budget hotels in comparison to the leased mid-market and luxury end of the market.

In addition to this, the report will also include a breakdown of the different lease types including fixed leases, hybrid leases and variable leases.

Gael Le Lay, Head of Hotel Investment at AXA Real Estate said: "The crisis has demonstrated the resilience of hotels under lease contract, and thus their use as long term holds delivering a secure income stream. Conversely, those hotels under management type contracts have been more volatile, which may suit the opportunistic strategies of short to medium term investors.

"Hotels now represent an increasingly recognized asset class within the remit of commercial real estate investors, hence the importance of robust analytics that allows investors to compare and define their hotel exposure against the conventional property assets."

Marc Socker, Senior Director - Hotel Fund Management, Invesco Real Estate commented: "Hotel investment across Europe has consistently demonstrated over 5 and 10 years stronger total returns than commercial real estate for lower volatility. We believe it is a valuable asset class for institutional investors particularly given its strong real income characteristics."

The results will be launched at a complimentary hotel investor briefing on July 12 at One Moorgate Place.

Source: IPD

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