Europe sees hotel value hike for fifth straight year

Hotel values in Europe increased for the fifth year in succession during 2014, with properties in the UK and Southern Europe seeing some of the biggest gains, according to the 2015 European Hotel Valuation Index.

The index – published this week by global hotel consultancy HVS – showed particularly strong figures for Madrid, which recorded an impressive year-on-year value climb of 14 per cent. The average value per hotel bedroom in the Spanish capital rose from €185,000 (US$205,000, £134,000) in 2013 to €211,000 (US$234,000, £153,000) in 2014. This was attributed to a slowdown in the city"’s new hotel supply and renewed international demand for rooms, particularly in the corporate sector.

The second biggest value rise in hotel stock was in Manchester, up 13.5 per cent year-on-year to £121,470 (US$185,526, €167,510) per room. The hike is partly attributable to the lack of new hotels in the city, according to HVS, a situation due to change as Manchester has a development pipeline of some 2,000 rooms opening by 2017. The city also witnessed the launch this week of the new Hotel Football, a venue directly opposite Old Trafford owned by a quintet of Manchester United legends.

Elsewhere in the UK, Birmingham also managed double digit growth, following improved performance and growing investor interest, according to report co-author James Heavey – an analyst at HVS London.

This year’s index reveals that Europe’s most expensive hotel rooms are still in Paris (€703,935, US$779,643, £510,461), London (£491,815, €678,222, US$779,643) and Zurich (€534,646, US$592,147, £387,700), considerably above the European average of €246,641 (US$273,167, £178,853).

"The trend for improving values should be sustained in the foreseeable future," concluded report co-author Sophie Perret, director of HVS London.

"There is clearly a narrowing of the gap that has, for the last few years, separated primary markets from those cities that were previously considered "no-go" areas for most investors.

"While cities such as Paris and London will remain out of reach for most, hotels in German cities continue to offer reliable opportunities and Southern European markets are certainly a bright spot at the moment."