There were five notable United Kingdom hotel portfolios that changed hands in 2022, comprising approximately 5,600 rooms.
All of the five major portfolio deals in the U.K. in 2022 were realized in the first four months of the year, a trend analysts say isn't likely to repeat in the first quarter of 2023.
The big question is whether either distressed pricing or high levels of repurposed capital will have an impact on upcoming quarters.
In value terms, there was roughly a 50/50 divide between portfolio hotel sales and single-asset hotel sales across the year, but that was not the case in the first part of the year.
Between January and April, according to business advisory Knight Frank, portfolios represented approximately 65% of the total deal flow.
Business advisory Avison Young said high inflation and interest rate hikes “may impact transactional volumes … into 2023. This may also cause owners to retain assets to weather out the storm until the economy is more appetizing.
“On the other hand, it is likely that there will be an increase in distressed or underperforming assets as rising operating and financial costs squeeze bottom lines and push owners to sell at a discount.”
Listed below are the five large hotel portfolio deals from 2022.
- January — New York City-based owner Fortress Investment Group acquired its majority stake in Irish hotel and aparthotel firm Prem Group for an undisclosed price. The deal involved 38 hotels with more than 3,000 rooms, mostly in Ireland and the U.K. but also in Belgium and The Netherlands.
- February — The Harris Family and Kings Park Capital bought the 31-asset Inn Collection Group from Alchemy Partners for approximately 300 million pounds sterling ($361 million), a deal spurred by the increasing popularity of country hotels during the pandemic. The collection has approximately 500 rooms, with one of its latest acquisitions being the 38-room Wordsworth Hotel in England’s Lake District National Park.
- February — Leicester-based Atlas Hotels in a joint venture with affiliate London + Regional Hotels acquired the six-hotel Chardon Group, which has 569 rooms in the Scottish cities of Dunfermline, Edinburgh, Glasgow and Perth. Atlas now has approximately 7,400 rooms in 60 hotels across the U.K., and more might be added, with L+R’s management stating a fund of approximately 200 million pounds sterling is available for expansion.
- April — U.S. private-equity firm KSL Capital Partners bought The Pig Hotels Group for an undisclosed price from owner Home Grown Hotels and with the stated aim of growing the lifestyle brand organically. The Pig currently has 208 rooms in nine hotels.
- April — Tristan Capital Partners acquired a majority stake in Raag Hotels, which owns “budget boutique” brand Point A Hotels. The price was 420 million pounds sterling and includes 10 hotels, seven in London and one each in Dublin, Edinburgh and Glasgow, and 1,347 rooms. The new owner said it plans to grow the portfolio by two to three hotels a year, first in the United Kingdom and Ireland and then potentially expanding across Europe, with management continuing to be overseen by Queensway, which remains a minority owner. With the deal, U.K. charitable foundation Wellcome Trust exited the hotel industry completely.