New entrants to the hotel trade plus existing business looking to expand accounted for just under three quarters of hotels sales in 2012, according to sector experts at Colliers International.
Hotels director Peter Brunt, who sold more than a dozen small hotels and pubs across the West last year – revealed that just 26 per cent of hotel sales in 2012 were distressed transactions.
He said: “The vast majority of deals, especially in the South West, involved new entrants to the market or expansion by existing hoteliers, challenging the widely held belief that most hotels sold were in administration or receivership.
“Despite these extremely challenging times, we’re encouraged by the increase in the number of new buyers who saw the opportunity to invest in the hotel market. They have clearly taken a long-term view on an improvement in real estate and recognised the immediacy of trading gains under their ownership.”
“Although there continue to be sellers that have to dispose of properties for financial or health reasons, this was overshadowed by those who made the decision to sell for reasons such as retirement, or a change of occupation.
The hotel sector generates £115bn annually and is the sixth largest employer in the UK.
Colliers International Hotels research revealed that 34 per cent of buyers were new entrants to the hotel market. Most of the remaining purchasers were existing hoteliers growing their portfolios or selling one hotel to acquire another or corporate buyers or sellers where the buyer planned a change of use.
Looking forward to the year ahead Peter Brunt added: “2013 will be similar to 2012 in terms of the level of activity and prices achieved.
“There are still buyers out there with cash or those supported by bank funding. We have also seen a marginal increase in private equity backed interest, together with new buyers who see the opportunity to acquire and run a hotel underpinned by the comfort of alternative use in the event of the hotel venture not being to their liking.”
He concluded: “Both buyer and seller sentiment was similar to the previous year although the banks, who are major influencers in our market, showed signs of accelerating the sales process whilst their colleagues in credit although remaining cautious did take a more realistic view on lending particularly to proven operators and better quality businesses.”