Time is right to buy in Europe say hotel experts

Many Middle East hotel investors are eager to acquire assets in Europe as prices slump, according to experts. 

"When speaking to our owners and other developers, most agree the timing is right and are eager to acquire assets,"  The Rezidor Hotel Group chief development officer Puneet Chhatwal said in Hotelier's Investor column by Arabian Hotel Investment Conference founder Jonathan Worsley. 

"Buying remains more popular than building. Many even have considerable equity. It’s the banks that are reluctant to fund and that will remain unless we have a few months of positive macro-economic news," he added. 

Mark Wynne-Smith, global CEO of Jones Lang LaSalle Hotels told Worsley that now was a good time for hotel buyers to look at acquiring assets in Europe as pricing "is likely to truly reflect the challenges the market faces". 

"I doubt whether investors who buy in 2012 will regret it in the future. While there is a lot of equity looking to get into the market, their target returns still require debt and this factor will mean that some of the tougher deals will take some time to close," Wynne-Smith asserted.

Others said that investment pace was expected to pick up in Europe. 

"The deleveraging cycle in the UK and continental Europe is now gaining pace. With the wall of refinancing deadlines due at end 2012 and early 2013, lenders and sponsors will be forced to find solutions, whether it be an outright sale or some form of new equity injection," commented Josh Wyatt, investment director, hospitality & leisure, Patron Capital Advisers LLP.
 

However, Derek Gammage, managing director for EMEA at CBRE Hotels warned that only those investors with adequate cash supplies should consider investments in the European hotel market.

"If you can fund these deals then yes. Debt remains a huge issue and if you have access to debt sources then now is an excellent time to buy – assuming you are either buying distressed stock where you can influence trade or buying assets that only trade once in a generation," said Gammage.