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05 July 2016 | Hotels

Hotel Investment Market Austria: Trophy Deals boost Volume in H1 2016

Vienna. Christie & Co can confirm that the pro-investment sentiment that prevailed in Austria during 2015 has continued apace into the opening months of 2016. Hotel transactions with a total volume approaching €440 million were reported in the first half of the year alone, comfortably surpassing the total volume for the previous year by June. The trend was driven by a number of large-scale trophy transactions. These included the sale of the Hotel Imperial and the sale of the Hilton Vienna, which was also the biggest hotel deal in Austrian history.

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“Throughout the first half of 2016, the hotel investment market was characterised by a number of high profile transactions. Even more than in previous years, the capital Vienna was the focus of activity,” explains Lukas Hochedlinger, Managing Director Germany, Austria & CEE at Christie & Co.

The year began with a trophy transaction involving the Hotel Imperial in Vienna (138 rooms), which was sold by Starwood Hotels & Resorts to the Al Habtoor Group, an investor based in the Middle East, for the equivalent of just over €70 million; Starwood has continued to operate the luxury hotel in the wake of the sale. Shortly afterwards, this impressive figure was eclipsed by an even larger transaction when the Hilton Vienna (579 rooms) was taken over by local investors Erwin Krause and Franz Kollitsch for around €200 million. In the second quarter, the Schöps Group also sold the former LaStafa building on Mariahilfer Strasse, which has accommodated the 186-room Hotel Ruby Marie since the end of 2015.

Deals were sold outside of the capital as well, with a number of notable transactions confirmed in the health and resorts area in particular. Acting on behalf of the seller, for example, Christie & Co was responsible for brokering the sale of two Falkensteiner hotels formerly owned by Erste Bank to a private investor in Austria (Balance Resort Stegersbach and Hotel & Spa Bad Leonfelden, 259 rooms in total). Christie & Co also identified a buyer in the sale of the Grimming thermal baths plus the 166-room Hotel Aldiana in Bad Mitterndorf. Demand for city hotels was also recognized away from the capital: another Hilton Hotel (the 176-room Hilton Innsbruck) was sold in the first quarter. The buyer in this case was the federal state of Tyrol, which plans to adapt the hotel into an office building for various state institutions.

Compared to the previous year, the transaction volume for the first six months more than trebled to approximately €440 million; the majority of buyers were Austrian investors. “Some of these hotels had been on the market for a long time,” reveals Hochedlinger. “The completion of these transactions underlines the attractiveness of Vienna and indeed Austria to both local and international investors.

Several other well-known hotels in Austria are also in the process of being sold,” he continues. “Some of these, including the Sofitel Vienna, will rank among the biggest deals of the year if the sales go through,” predicts the market expert. Several other properties are available in the Christie & Co portfolio, including resort hotels, aparthotels and city hotels across all price ranges. “Given the brisk demand for hotels in Austria, we expect the second half of the year to spring more surprises. It is likely that the record transaction volume already achieved will be driven even higher,” concludes Lukas Hochedlinger.