London still leads the UK when it comes to attracting investment in the hotel market, according to the latest report on hotel transactions by Deloitte.
The business advisory firm's figures show that hotel transaction activity across the UK fell in the second half of 2012, totalling £1 billion during the period compared to £2.5 billion during the first half of 2011.
Nick van Marken, global head of hospitality at Deloitte, commented: "Some recovery in the UK hotel transaction market was apparent in 2011, mainly in the second half of the year, and this continued into the first months of 2012.
"However, activity slowed in the second half of 2012 – whilst there are a number of transactions in the pipeline, we saw very few get across the line."
London continued to see the lion's share of transactions, suggesting it remains an attractive place for those looking to invest in the hotel market to buy properties and create new hospitality employment opportunities.
A number of notable single asset deals have taken place in London over the past six months, including the acquisition of the Cavendish Hotel by the Ascott Group for £159 million.
"Consistent with the first half of 2012, single asset transactions dominate and London remains the focus for most investors," said Mr van Marken.
Meanwhile, it is expected that transactions across the UK will start to rise again over the coming year.
“There are a number of portfolio and single asset transactions that are currently being marketed. As a result, activity is expected to pick-up," Mr van Marken continued.
"That said, difficulties in accessing debt funding and the continued disparity between buyer and seller in terms of price expectation mean disposal processes are likely to continue to be longer and more difficult to complete.
"The market will continue to favour cash buyers or those not totally reliant on bank financing to close a deal."
Berkeley Scott is a leading London hotel recruitment agency