High Net-Worth Investors Pour Billions of Euros in European Hotel Market

The European hotel investment market has proved that it is as strong as ever with transaction volumes reaching 9 billion euros at the half year mark, compared to 9.3 billion euros in the first half of 2006 according to a new study by Jones Lang LaSalle Hotels.

Portfolio transactions represented 72 percent of total investment at 6.5 billion euros, and high net-worth individuals (HNWI) have surpassed private equity players as the dominant investor group in European hotels.

Private equity investors generally have shorter investment horizons and are therefore more sensitive to increases in the cost of borrowing. High net-worth individuals on the other hand have been the dominant investment force so far this year –they account for over one third of all hotel purchases, over four times the amount at the same period last year.

In addition, institutional investors have become increasingly active buyers this year raising their market share to 17 percent in the first six months compared to 5 percent in 2006.

Whilst private equity investors remained active buyers in the European hotel market, they also became the dominant vendors, disposing of eight times the volume of hotels during the first half of 2007, compared to first half 2006. They accounted for almost one third of all sales, whilst hotel operators still accounted for over half of total sales.

Intra European investment is cross border investment within Europe, but excluding investment from the Americas and Asia Pacific.