Scotland's hotel investment market falls by third to £149 million - Savills research

Hotel transaction volumes in Scotland totalled some £149 million across two dozen key deals in 2022, a marked fall on the year before, according to new research.

Savills said the activity marked a 34 per cent decrease on 2021 investment volumes (£226m), reflecting “wider macroeconomic conditions” including rising debt costs, impacting the UK hotel market, where overall investment volumes fell by 27.5 per cent year on year. The firm was counting transactions of more than £1m each.

Key individual deals in Scotland included: Premier Inn Glasgow, Buchanan Galleries (circa £30.2m); Fonab Castle, Pitlochry (Savills advised vendor) and Former Park Inn Glasgow (about £4.5m, which Savills sold). Key portfolio transactions included the Chardon Portfolio, which saw Atlas, supported by L&R Hotels, acquire the Chardon Group, including Holiday Inn Glasgow Theatreland, Holiday Inn Express Glasgow, Holiday Inn Express Edinburgh Royal Mile, Holiday Inn Express Edinburgh Airport, Holiday Inn Express Dunfermline and Holiday Inn Express Perth.

Steven Fyfe, hotel capital markets director at Savills Scotland, said: “While the second half of the year was challenging, in terms of transactional volumes, H2 was marginally stronger than H1 in Scotland, demonstrating the ability to complete transactions in a difficult market. We are seeing stability starting to return to the market as we begin the new year with a number of sale processes underway. In terms of investment volumes, we expect a strong start to the year, with year-end volumes anticipated to reach £200m.”

Savills said Scottish hotel transaction volumes in 2022 reflected about 5 per cent of overall UK volumes (£3 billion).