Key Takeaways
- • Hotel buyers are finding opportunities only at the right price, as a persistent gap between buyer and seller expectations constrains transactions despite strong appetite from private equity, family offices and lenders.
- • The Shepherd Mayfair Hotel in central London was acquired off market from distressed operator Genting by a joint venture of Orka Investments and Bain Capital; Estates Gazette reported the price at £75-£80 million versus a peak asking price of £120 million.
- • Hold-period risk is central: Scudamore said he had never seen a hotel stabilise within three years, while PE expectations remain for an IRR in the high teens and family offices are often more demanding.
- • Lenders remain active, with challenger banks offering loan-to-value ratios of up to 75 percent, though high street banks now apply a more forensic underwriting process.
- • Panelists argued that operational control, brand selection and secondary recapitalisations are key levers, and that financial engineering cannot rescue weak fundamentals.
Summary
Hotel investors are finding opportunities, but according to panelists at the Annual Hospitality Conference 2026 in Manchester, deals only proceed at the right entry price. Despite strong appetite from private equity, family offices and lenders, transactions remain constrained by a persistent gap between buyer and seller expectations. Raoul Malhotra, founder and CEO of Orka Investments, said the environment is as challenging as ever, and that buyers can no longer reliably underwrite rental, ADR or NOI growth, making the purchase price "the one thing you have to get right from day one."
The Shepherd Mayfair Hotel in central London, which opened in October 2026, was acquired off market from distressed global hotel and casino operator Genting. The joint venture between Orka Investments and Bain Capital described it as a "once in a generation" opportunity to acquire a vacant freehold block in Mayfair. The buyers did not publicly disclose the 2021 purchase price, but Estates Gazette reported the transaction at £75-£80 million, well below the peak asking price of £120 million. Charles Scudamore, managing director of Hetherley, said many deals fail early because of the bid-ask gap, with fire safety, cladding works and deferred maintenance creating substantial liabilities for buyers.
Hold periods also pose a challenge. Private equity investors may underwrite three-to-five-year horizons, but hotel repositioning often takes longer to stabilise. Scudamore said he had never seen a set of numbers stabilise within three years. Nonetheless, PE expectations remain for an IRR in the high teens, and Malhotra said family offices are often more demanding on return requirements than private equity funds, while capital is growing more sophisticated.
Lenders continue to show strong appetite. Pierre-Edouard Vintrou, head of investment and development at Vertiq Hospitality Partners, said bank appetite to service a portfolio of UK hotels was "incredible." Second-tier challenger banks are offering loan-to-value ratios of up to 75 percent. High street banks are applying more forensic analysis than a decade ago, which Scudamore said was not a bad thing. Operational control was also emphasised, with Scudamore stressing deep involvement in day-to-day operations, and Vintrou stating that operational control is how value is created for investors. Malhotra described the Shepherd Mayfair's positioning as a flag-free, vacant-possession product, arguing that a 25-year HMA with a major group would reduce exit liquidity, and that the hotel delivers a £500-a-night product in a £1,000-£1,500 market. Malhotra also described Orka as a classic joint venture common equity investor pursuing secondary recapitalisations to realise returns. Scudamore concluded that the fundamentals must be solid, warning that financial engineering cannot compensate for a weak underlying investment.
The Shepherd Mayfair Hotel in central London, which opened in October 2026, was acquired off market from distressed global hotel and casino operator Genting. The joint venture between Orka Investments and Bain Capital described it as a "once in a generation" opportunity to acquire a vacant freehold block in Mayfair. The buyers did not publicly disclose the 2021 purchase price, but Estates Gazette reported the transaction at £75-£80 million, well below the peak asking price of £120 million. Charles Scudamore, managing director of Hetherley, said many deals fail early because of the bid-ask gap, with fire safety, cladding works and deferred maintenance creating substantial liabilities for buyers.
Hold periods also pose a challenge. Private equity investors may underwrite three-to-five-year horizons, but hotel repositioning often takes longer to stabilise. Scudamore said he had never seen a set of numbers stabilise within three years. Nonetheless, PE expectations remain for an IRR in the high teens, and Malhotra said family offices are often more demanding on return requirements than private equity funds, while capital is growing more sophisticated.
Lenders continue to show strong appetite. Pierre-Edouard Vintrou, head of investment and development at Vertiq Hospitality Partners, said bank appetite to service a portfolio of UK hotels was "incredible." Second-tier challenger banks are offering loan-to-value ratios of up to 75 percent. High street banks are applying more forensic analysis than a decade ago, which Scudamore said was not a bad thing. Operational control was also emphasised, with Scudamore stressing deep involvement in day-to-day operations, and Vintrou stating that operational control is how value is created for investors. Malhotra described the Shepherd Mayfair's positioning as a flag-free, vacant-possession product, arguing that a 25-year HMA with a major group would reduce exit liquidity, and that the hotel delivers a £500-a-night product in a £1,000-£1,500 market. Malhotra also described Orka as a classic joint venture common equity investor pursuing secondary recapitalisations to realise returns. Scudamore concluded that the fundamentals must be solid, warning that financial engineering cannot compensate for a weak underlying investment.
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