Figures from PwC analysing recent deal activity in the hotel sector show that for the first half of 2019 total volume for transactions reached £2.6bn, a 35% drop in comparison to the same period in the first half of 2018.
There is still however an expectation for continued investment from Europe and the Far East for the remainder of the year, given the relative low value of the pound. Assuming completion of some reported current deals, PwC forecasts deal volume to reach circa £5.1bn in 2019, a 28% decrease compared to 2018.
Even if a Brexit deal is secured by the end of 2019, PwC forecasts a further period of time before stability is regained and investor confidence returns to the UK, with 2020 hotel transaction volumes forecast to continue to marginally fall to c. £4.8 billion.
Sam Ward, UK Hotels Leader at PwC, said: “What we have seen in the first half of the year has been a more cautious approach by investors which has been dictated by the uncertainties of Brexit becoming more acute, ongoing volatility in the market and weakened business sentiment. Portfolio transactions are down more than a third in comparison to the same period last year and single asset transactions are down more than a quarter.
“Until there is further clarity on Brexit, we expect the cautious approach to investment to be reflected in the second half of the year. Even if a Brexit deal is secured by the end of the year, it will take some time before stability returns.”