London has its eye on big hotel value gains

A near quarter-loss in value has been sustained by hotels across Europe in the past two years.

According to the Hotel Valuation Index (HVI), annual research conducted by HVS London, this year's fall in value of upscale hotels was tracked at 13%. London, meanwhile, grew 14% in sterling terms year on year, against an 11% fall in value YOY to 2009.

Commenting on the results, survey co-author Tim Smith, a director of HVS, noted that although Paris remains in top spot with hotel values at €547,000, the increase in value in London hotels to €484,000 (£431,000) is welcome.

Three German cities, Berlin, Frankfurt and Hamburg, succeeded in containing the second year of decline with falls in value below 2.5%. "Occupancy in central London has increased in 2009, with corporate business largely replaced by leisure visitors. Provided hoteliers can manage the transition back to a more balanced revenue stream they should be well placed to enjoy RevPAR and value growth in 2010," he noted.

"Part of the popularity of the UK, and London in particular, is down to the exchange rate with the Euro, but a significant issue has been the flight to less volatile markets by international investors."

• For a free PDF copy of the European Hotel Valuation Index for 2010 (the print version costs £250), click here.