Hotel transaction volumes totalled approximately £860m for the first six months of 2023, some 60% below investment volumes for H1-2022, demonstrating the gulf between hotel trading performance and transactional activity has never been wider, according to the latest research from Knight Frank.

Whilst it remains challenging to successfully execute and complete a deal, there has been a strong recovery of UK hotels’ trading performance given the extensive headwinds faced.

With London’s ADR (average daily rate) tracking above inflation and ADR for regional UK hotels on par with 2019 prices, this resilience in trading performance is attracting investor sentiment in the sector, particularly from investors with a deep understanding of the sector. Appetite to secure quality hotels in prime locations, or for those hotels with repositioning and value-add potential, remains strong, the firm says.

During the first half of 2023, specialist hotel-focused investors, HNWIs and family-offices have accounted for 70% of the transaction volume. Well capitalised and non-reliant on raising funding through the debt markets, these buyers have continued to source quality, sizeable assets and create sustainable growth opportunities for their existing portfolios. Mostly off-market, these deals have totalled approximately £600m and seen an average transaction price per room of £273,000, some 75% higher than the UK average.