All-time high on Austrian hotel investment market in 2016: Result near the billion mark
The hotel transaction volume in Austria comfortably exceeded €900m for the first time in 2016 – a resounding record that more than doubled the previous high of 2012.
According to Christie & Co, the investment volume on the Austrian hotel market was exceptionally high over the first half of 2016 as hotel properties with a total value of around €440m changed hands. The pro-investment sentiment continued throughout the second half, producing a transaction volume for the total of 2016 of almost €1bn for the first time. The figure was three times the total of 2015, and amounted to more than a fifth of Germany’s hotel transaction volume.
“The record value was driven by a number of large-scale trophy transactions as well as several portfolio deals, including those with Accor and Invesco,” explains Lukas Hochedlinger, Managing Director Germany, Austria & CEE at Christie & Co. “Although Vienna accounted for many of the transactions as in recent years, hotel sales in the federal states also contributed to the outstanding result for 2016,” he adds.
Trophy deals in Vienna dominate first half, portfolio transactions dominate second half
The year began with the sale of the historic Hotel Imperial in Vienna (138 rooms), which was sold by Starwood Hotels & Resorts to the Al Habtoor Group in the Middle East for the equivalent of just over €70m, while local investors Erwin Krause and Franz Kollitsch acquired the 579-bedroom Hilton Vienna for the record sum of almost €200m in the first quarter of 2016. The Schöps Group sold the former LaStafa building on Mariahilfer Straße, which has accommodated the 186-bedroom Hotel Ruby Marie since the end of 2015, while the MBI Group sold the 68-bedroom boutique hotel The Ring to the AINA Capital fund established by Rothschild. Several smaller hotel transactions were also concluded in the Austrian capital.
The second half of 2016 featured further eye-catching deals, especially portfolio transactions. In Vienna, for instance, the Ibis Mariahilf (341 rooms) and the Mercure Biedermeier Vienna (198 rooms) were sold during the summer; elsewhere the Ibis Styles Linz (115 rooms) and the Mercure Bregenz (94 rooms) were sold to French Grape Hospitality as part of an Austria-wide portfolio. Towards the end of the year, Invesco sold the 499-room NH Vienna Airport and the 140-room NH Salzburg City to hotel investor Pandox, also as part of a wider portfolio. Similarly worthy of note is the transaction involving the developer UBM, which successfully marketed its Ibis (300 rooms) and Novotel (277 rooms) projects at Vienna’s main station under the terms of a forward deal. Hotel deals in Vienna thus accounted for more than two thirds (approximately €650m) of the value of all hotel transactions in Austria.
Impressive number of transactions in federal states
In addition to the aforementioned transactions in Linz and Bregenz, some other remarkable hotel sales were concluded in the federal states. City hotels sold early in 2016 included the 176-bedroom Hilton Innsbruck to the State of Tyrol and the 70-bedroom Goldener Hirsch in Salzburg to private investor Hans-Peter Wild. In the holiday and resorts sector, Christie & Co acted on behalf of the vendor to broker the sale of two Falkensteiner Hotels formerly owned by Erste Bank, Balance Resort Stegersbach and Hotel & Spa Bad Leonfelden, comprising 259 rooms in total, to an Austrian private investor. Subsequently, the same buyer also acquired the Falkensteiner Hotel Carinzia (185 rooms) and the Falkensteiner Funimation Katschberg (160 rooms). Other high-profile holiday hotel investments last year included the 126-bedroom Dorint Hotel Seefeld and the 150-bedroom Austria Trend Hotel Schloss Lebenberg.
Big names investing in Austria
Although Christie & Co reports that the majority of deals over 2016 as a whole continued to involve Austrian investors, international investors predominated where total volume is taken into account. “A lot of investors on the lookout for attractive investment opportunities on robust markets gravitate towards Austria, and especially Vienna, for safe investment options,” says Hochedlinger, explaining the trend.
Stable outlook for 2017
Christie & Co contends that the first half of 2017 will be less spectacular than the first six months of last year; only the conclusion of several unforeseen portfolio or trophy transactions would sustain the trend of 2016. “Although several hotels are currently on the market in all states and in all price categories, we do not expect these to break the record value of 2016. We believe 2016 was an exceptional year, and we think the investment volume will settle down at the level of recent years in 2017. Yet, Austria will remain a safe haven for investors and will be high on the wish list of international investors,” says Hochedlinger, summing up the situation.