Savills forecasts 2022 hotel transaction volumes to reach £4.5 billion

savills forecast

Savills forecasts that 2022 will see transaction volumes reach £4.5 billion, surpassing the 15 year average of £4.22 billion.

The projections come as the appetite for UK hotels continues to grow, with year-end transaction volumes set to total £4.1 billion, 78% above 2020.

Additionally, Savills forecasts that London RevPAR could be within 75% of pre-Covid levels by the end of 2022, driven by a strong recovery in occupancy as tourist crowds continue to return to the capital.

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The report also finds that environmental, social and governance (ESG) considerations will move further up the agenda for operators, developers and investors in 2022 and beyond.

Furthermore, institutional demand for ESG compliant properties could mean the emergence of a yield spread with tighter yields being achieved on ESG assets vs their non-ESG compliant counterparts, says the international real estate advisor.

Robert Stapleton, head of hotel transactions at Savills, says: “Activity in 2022 will be supported by more stock coming to the market and improving operational performance, particularly in London which has lagged the trajectory of the UK’s regional markets. The return of international visitors has been long awaited and we are already seeing the positive effects that growing international arrivals are having on the hospitality industry.”

Stapleton remains cautious about recovery though, noting “while there is a weight of money looking to be deployed into the sector supported by the resilience of longer term demand drivers, there remains operational challenges in the short-term and uncertainty which could delay a recovery with rising Covid infection rates in the UK.”

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Eamonn Crowe

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