HVS’ London office has today released the latest edition of its annual review of European hotel value trends, the Hotel Valuation Index (HVI).
FOR IMMEDIATE RELEASE
March 6, 2007
The survey shows that hotel values achieved a third consecutive year of
growth, increasing by 9.4% in 2006, compared with an increase of 5.0% in
2005. It is the first year since 2000 in which all of the 28 markets covered in
the index experienced increases in value, reflecting the health of the
industry throughout Europe. All bar eight markets have either reached
their highest ever values or surpassed the peak values achieved in 2000.
The top five most expensive European cities in which to buy a hotel
remain in the same order for the third consecutive year.
Commenting on the results, survey co-author Dominique Bourdais, a
director of HVS, noted that London has retained its position as the most
expensive city in which to acquire a hotel.
"After breaking through the €500,000 barrier last year, the average value
per room has increased to €576,700, a 12% growth over 2005’s record
values. Paris remains in second place," he noted.
"For the fourth time in the last five years, Moscow had the greatest
percentage growth in value, at 21% in 2006, partially fuelled by the strong
desire of developers and operators to enter the market," he added.
Survey co-author Elana Bader commented that the European average is
boosted largely by the extraordinary growth in value by the top markets,
including London, Paris, Milan, Zürich and Geneva, as well as the
strengthening of values in the remaining cities.
"All but two of the 28 markets under review achieved value increases in
excess of inflationary growth," she commented. "The average European
values per hotel room in 2006 have subsequently reached the highest
levels in history," she added.
The authors also noted that while debt markets remained competitive,
investors have increased their typical geographic investment boundaries
and pushed up activity in areas such as Eastern Europe over the last few
"The concern of increased availability of debt financing and resulting
growth causing oversupply didn’t quite pan out as had been thought in
early 2006, but the same concern remains for the coming year as markets
show no signs of decline," noted Dominique Bourdais.
"In 2007 we expect that a lot of the markets will continue the upward
trend in hotel values for a further year, albeit perhaps not at the same
growth rate as 2006 or 2005. Lending terms are at their most competitive
which will limit further yield compression. Nevertheless, in view of recent
performance, investors’ appetite for the hospitality industry is likely to
lower yields still further as many investors compete for each
opportunity," he concluded.
The European HVI has tracked trends in hotel values in key regional
markets since 1993. The survey covers upscale hotels in 28 gateway cities
across the continent. Copies of the HVI 2007 report are available free of
charge from HVS, 7-10 Chandos Street, Cavendish Square, London W1G
9DQ and its website: www.hvs.com
For more information, contact:
Dominique Bourdais, Director
Phone: +44 20 7878 7721
Elana Bader, Consultant & Valuation Analyst
Phone: +44 20 7878 7710
Russell Kett, Managing Director
Phone: +44 20 7878 7701
Or by fax on +44 20 7878 7799
HVS is a full-service hospitality consultancy providing industry skill and
knowledge worldwide. HVS offers market and financial feasibility
studies, valuations, strategic analyses, development planning, and
litigation support. Additionally, HVS specialists provide unique
knowledge in the areas of executive search, investment banking,
brokerage, asset management and corporate and single property strategic
planning, management contracts, environmental sustainability, timeshare
consulting, food and beverage operations and restaurant appraisal,
interior design, gaming, technology strategies, organizational
assessments, operational management, strategy development, convention
facilities consulting, marketing communications, and investment
consulting. Since 1980, HVS has provided hospitality services to more
than 15,000 hotels throughout the world for virtually every major
industry participant. Principals and associates of the firm have written
textbooks and thousands of articles regarding all aspects of the hospitality