Investment in UK hotels fell by 68% in 2008, finds research from Jones Lang LaSalle Hotels.
Total hotel investment volumes totalled £1.6bn in 2008 compared with £5.2bn in 2007, said the property consultancy.
The decline was particularly reflected in the volume of portfolio transactions which declined 81% from £3.8bn in 2007 to £700m in 2008.
Jonathan Hubbard, managing director of northern Europe at Jones Lang LaSalle Hotels, said: ‘This trend coincides with hotel operators being more prominent purchasers in the market, moving to an own and operate model, often under a brand franchise, and reversing the trend seen in recent years.
‘Moreover, active investors in the current market are focusing on reducing their risk. With trading performance across the country expected to deteriorate in 2009 at least, the relative security of lease agreements are preferred.’
High net worth individuals were one of the main types of buyers in 2008, responsible for 29% of investment. Private equity firms abandoned the market with investment down 94% from £799m in 2007 to £45m in 2008.
Jones Lang Lasalle said it expects a further decrease in transactional volumes over 2009.