More than 100 hotel assets – a combination of going concern and investment deals – were sold or acquired by the Colliers team on behalf of their UK and Ireland-based clients, with an aggregate value of £700m (based on assets sold).
Julian Troup, Director and Head of UK Hotels Agency at Colliers International said: “The whole of our hotel agency business has enjoyed an outstanding year.
“At the beginning of the year the target was market share and an increased focus on larger going concern hotel sales and hotel investment sales; I am delighted to announce that we have greatly exceeded all expectations.
“86% of the transactional activity was on going concern sales and the remaining 14% on investment sales in terms of deals, with interest generated from a diverse range of buyers and investors.
“We are also seeing an increasing number of international investors entering the scene, which is particularly encouraging.”
Colliers’ London-based hotel agency and investment business enjoyed a phenomenal year in 2013.
Julian said: “The appetite for London hotels has been maintained throughout the period with no signs of any reduction in requirement. An increase in investment values is also being driven by demand from institutional and international audiences.”
The team’s key highlight of the year was acting as sole acquiring agent for a major Scandinavian pension fund on ‘Project Prime Minister’ – an impressive 250-bedroom, five-star, luxury hotel, based in the City of Westminster.
The matter was completed by Colin Hall, Head of London Hotels at Colliers International.
Colin said: “We had been on the hunt for a suitable investment for this client for a couple of years when this opportunity presented itself. We were able to negotiate directly with the seller on an off-market basis and secure this major deal.”
The Colliers team also reported an encouraging uplift in the amount of interest being expressed in provincial hotels – not only from buyers and investors, but from UK banks following a phase of inactivity since the ‘boom’ period.
Oakley Court Hotel, Windsor
The stunning gothic style property has 118 letting bedrooms, nine-hole golf course set in over 33 acres of beautiful landscaped gardens leading straight onto a private stretch of the River Thames. Formerly a private residence, Oakley Court gained notoriety during the 1960s and 1970s thanks to the building being used as a film set for several Hammer House of Horror films including Dracula, as well as being used as Frank N Furter’s castle in the cult classic Rocky Horror Picture Show.
“We received instructions to openly market the business which attracted considerable interest from a diverse range of both domestic and international buyers with the sale eventually taking place at an attractive price to an offshore purchaser”
This was a prime example of the hotel’s ‘worth’ exceeding its ‘value’. The hotel valuation process regularly fails to reflect hope value, alternative or creative use and, in recent years, has removed any potential future uplift.
As a consequence there are too many willing buyers prepared to pay a price that are held back by a cautious valuer constrained by valuation methodology and a shortage of quality comparable evidence.
Fota Island Resort, Cork
The property on offer included a 5 star 133 bedroom hotel, leisure centre and spa, championship 27 hole golf club with a substantial club house, golf academy, offices and associated buildings and 54 holiday lodges with planning for 160 more. Following a competitive bids process, the sale was confirmed at a very pleasing consideration to a Beijing based concern.
Etrop Grange Hotel, Manchester
The four-star hotel with 64 bedrooms and extensive conference facilities was sold in a confidential fashion..The Grade Two-listed Georgian mansion near Manchester Airport, was acquired by Squire Hotels
Julian said: “UK banks appear to be taking a more realistic approach to new lending.
“Previous constraints in this sector appear to be slowly easing and improving deals are being offered to buyers who are now more eager to invest in the market.
“However, it is important to note that where the better hotels are seeing values increase due to a combination of buyer sentiment and an increasing level of bank support, the market remains polarised.
“In contrast, a weaker hotel attracts less confidence from a buyer and in turn, only modest support from the bank; as a consequence, there is little evidence of poorer quality hotel assets showing any material increase in value.”