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The Value of Hotels in Europe

According to the information provided by the European Hotel index, the return of hotels in Europe cannot be called sparkling. Hotels across Europe return around 6.9% in local currencies, while hotels in the UK return almost 15%. The current value of assets comparing to the prerecession level is even more striking – hotels in the UK value just 12.7%!

The study, conducted by the European Hotel index, covers 373 hotels in 9 countries of Europe. The net value of all of them estimates US$10.2 billion (approximately 7.6 billion of Euros). The study is mainly targeted at investors – hotel market is quite a challenging class, so ups and downs here are usual.

European hotels were very popular among investors prior to recession, but in 2008 and 2009 the level of investments decreased significantly. In 2010 the situation started improving, especially after many investors had faced difficulties in investing into prime European locations. The desire to diversify portfolios has led to improvements in the volume of investments. In 2010 the income of investors estimated 5.5%.

The situation in the UK is quite diversified. While hotels in London become a popular form of investment, the rest of the UK doesn’t show such great results. Such situation is perfectly understandable – the return of London accommodations reaches almost 20%, while in the rest of the UK it is just a bit more than 7%.

Hotels in Germany stay stable in terms of their returns, but this stability is not very beneficial for investors as this country hotels’ returns are among the lowest ones from the 9 countries participating in this study – just 4.2%. The returns of hotels in France estimated 9.7% in 2010.

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