Hotel Investment Provides Highest Returns in 2012

Posted on 27 June, 2013 by Kirsten Kennedy

According to the IPD Pan-European Hotel Performance Report released this week, investment in hotels provided the highest return in the commercial property sector last year.

The report shows that the European hotel sector provided a total return of 5.8 per cent in terms of local currency during 2012. This is stronger than the overall European property total, which stands at 4.3 per cent, and significantly outperforms mainstream categories such as shops, offices and industrial property.

Furthermore, when results from the last ten years are collated, hotels also posted the highest returns in terms of investment with 7.2 per cent per annum on average, narrowly beating retail which showed returns of 7.0 per cent.

Marc Socker of Investco believes that investors seeking to achieve a high, and safe, return should consider putting their money into hotels.

He says; “The index provides further evidence that the hotel sector is a very attractive asset class when compared to other real estate asset classes, offering investors a relatively secure and stable income, both in the short term and long term.”

Although the performance of the hotel sector varied greatly across Europe, none of the twelve countries measured posted negative returns in 2012 which, amidst the Eurozone crisis, made this category something of an anomaly. France revealed the strongest results with total returns of 14.6 per cent, while at the bottom of the table Italy pulled its 2011 result of -4.9 per cent up to a positive 0.9 per cent in 2012.

Head of Research at IPD, Peter Hobbs, says; “The hotel sector has shown relatively strong returns over the short and long term, particularly during times where the European market is as weak as it is.

“The steady growth of this sector over the last ten years has shown little volatility, driven perhaps by its tendency towards the fixed leasing structure and therefore the emphasis on income.”

While the situation in certain southern European economies remains somewhat volatile, it is believed that the hotel sector will remain buoyant for the foreseeable future. And with large retailers such as IKEA now looking to invest in hotel developments, it seems that this sector can only grow in popularity.

Do you think the hotel sector will be able to grow indefinitely, or will there come a time when oversupply sparks a contraction?




Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.


Recent Posts

The latest property data has identified Newquay as the fastest property seller’s market in the UK

Investing in your garden can increase your property’s value

French Riviera temping high-end homebuyers

How can the ownership rights of my commercial property impact a business sale?

Should I incorporate virtual property viewings permanently?

Investment expected to increase across Asia-Pacific in 2021

UK property industry slows as the conclusion of tax break looms

BNP Paribas cautioned investors on Friday as debt-trading bonanza that increased its earnings this past year

Over 300,000 property purchases fell through in 2020 – we show the most frequent motives and the best way to get your house sale back on track

House Prices in the Capital Surpass £500,000

Optimism from the Bank of England’s chief economist

The most expensive commercial properties.

Businesses operating from shared premises will miss out on grants

BA cuts 12,000 jobs, unions hit back

Media Streaming Service See Record Subscriptions

Covid-19 Causes Millions To Claim UK Furlough Scheme