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UK Hotel transaction volumes exceeded £1.5 billion for the first four months of the year, with the strong spell of investment activity that occurred during the final quarter of 2021 continuing into 2022.

Total investment volume for the first four months of 2022 is already some 40% ahead of H1-2021, with two more months to go. Transactional activity has been relatively evenly split, with London securing approximately £750 million of investment, whilst regional UK achieved over £800m of hotel transactions.

^{Source: 博鱼体育集团 Frank Research}

Portfolio hotel transactions have notably increased in volume compared to last year, accounting for almost 65% of the sector鈥檚 total investment activity, representing over 4,200 rooms. The sale of The Pig Hotel Group, the Inn Collection Group and Chardon Hotels all contributed to the regional UK activity; whilst the £420m sale of Point A Hotels as well as Frogmore and C1 Capital鈥檚 joint venture to acquire three hotels for £150m, including the Hilton London Olympia, provided a significant boost to London鈥檚 transactional activity, whilst further adding to regional UK investment.

With continued robust activity by Private Equity investors, deploying over £1 billion into UK hotels, one of the underlying trends so far in 2022, has resulted in deals being structured which allow for former owners and/or management to retain a vested interest in the day-to-day operations and future success of the business. Under new ownership, such partnerships are expected to fund and deliver the next phase of growth, with the development or repositioning of sites.

Asset selection and scrutiny of management teams has been a key driver of those hotels successfully attracting investor interest. With the Pig Hotel Group and The Inn Collection Group under new ownership and the sale of the majority stake of Point A Hotels, these are all examples of deals transacting to Private Equity investors, whose financial commitment is testament to their belief in the product and the future performance of the existing management to deliver the projected returns and uplift in future value.

^{(Wyck Hill House Hotel, The Cotswolds, 60 Rooms 鈥� Acquired by Private Equity Investors in April 2022)}

The latest available trading data for the period to the end of March 2022, confirms that the sector continues to make a robust recovery. With investors taking a long-term view, buoyed by the upturn in the cycle, investment levels are expected to remain strong throughout 2022, despite quality, sizeable single asset hotel stock remaining in short supply.

A wealth of capital continues to be deployed and for well-performing assets in prime destinations, or those which offer value-add plays, they remain highly sought after. With sterling having depreciated to US$1.26, its lowest level since June 2020, UK hotel real estate is set to become notably cheaper for some overseas capital. In particular, US investors are likely to remain for a second consecutive year, the greatest source of overseas hotel investment into the UK, having invested over £850 million in 2021.