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2011 was an interesting and challenging year for the hotels sector. We witnessed a gradual increase in transactional activity in the first half of the year with BLP involved in deals worth over £1bn. The economic uncertainty caused by the Euro crisis in the autumn dampened activity levels for a period across the markets. That effect seems to have subsided and we are seeing renewed transactional activity. There certainly continues to be appetite for prime hotel assets and the UK remains one of the most active markets within Europe.

Several trends continue to shape the UK hotels sector. A lack of available finance in the market from traditional sources has led to increased use of sale and leaseback structures as an alternative form of financing. Alongside this we have seen the decoupling of the London and regional UK markets with London seeing better hotel performance and a far greater level of investment interest.

This has substantial parallels in the wider European market. Key international cities such as London, Paris and Amsterdam have now seen hotel performance reach the pre-2008 peaks. Throughout the credit crunch these have been markets with good levels of interest from investors.

We anticipate continued strong levels of transactional activity in London and other key international cities in 2012, but also greater activity in the wider market. Uncertainty remains, particularly over the future of the Euro, and transactions require genuine commitment and expertise to be successfully executed.

Finally, we are very proud of the recognition given to us by the IHIF members in being awarded the 2011 legal adviser of the year to the hotel investment sector.

If you have a project that you would like to discuss with us, please do get in touch.

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Andrew Little

BLP
Partner - London
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John Sipling

BLP
Partner - Abu Dhabi

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