With the Ryder Cup at Gleneagles grabbing headlines recently, global hotel consultancy HVS London says hotel investors are rediscovering the appeal of European golf resorts evidenced by £322m worth of major single asset transactions in golf resorts, compared with none in 2013 and £107m-worth in 2012.
The new HVS London report, European Golf Resort Investment, says economic recovery is now encouraging institutional investors and private equity organistions to invest in golf resorts. These properties offer multiple revenue streams as well as potential for future development. Much of the new investment is coming from the US.
“American investors are seeking high profile trophy assets on the back of the high level of home demand, a familiarity with the business and intense competition for assets signalling lower returns stateside,” said report author Harry Douglass (pictured), Associate HVS London.
Following a boom in the 1990s, Europe’s golf resorts were subsequently thought to be over-supplied in many locations. A reduction in both corporate and leisure spend drove RevPAR down, along with food and drink sales. The withdrawal of debt from the market and lower loan-to-value ratios decreased values even further.
Hotel performance stabilising over the past 12 months has prompted a number of high profile resort transactions such as the sale of both Doonbeg Lodge in County Clare and Turnberry to the Trump Hotel Collection for £8.3m and £36m respectively, and the sale of Spain’s Hotel Guadalmina in Marbella to the George Soros-backed Hispania Activos Inmobillarios for £18m. More recently Wentworth in Surrey was sold to the Beijing-based Reignwood Group for £135m.
While the development of existing resorts continues apace, including Rocco Forte’s Vedura scheme in Sicily, the Castelfalfi Club in Tuscany and Trump International Aberdeen, potential acquisition targets across Europe include the £20.8m sale of the Adare Manor estate in Ireland’s Co. Limerick.
“Scotland and Ireland have proved key places to invest in golf resorts, but France and Spain now have a number of large-scale destinations with the benefit of a strong leisure and commercial market base,” said Douglass.
“The majority of European resorts are, by their nature, highly seasonal with some even closing during the winter months,” he added. “Whilst this may be acceptable in Alpine environments where the economy largely rests on the ski-season, hotel owners in more urban locations and across the coastal-markets continue to work hard with their operators at lengthening the shoulder periods and bolstering the low season by attracting domestic and international conferences.
“The quality of the hotel facilities including the golf course, its proximity to nearby attractions, and its ease of access are equally important in capturing income from the MICE segment. Looking ahead, as custom from this area of the market improves and genuinely-new-business is generated, the intermediaries will probably become more discerning.”
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