The 400-room 'Hotel Debutesq' property overlooking Hyde Park is expected to fetch nearly $350 million.

LONDON—The owners of a famous London hotel have put their freehold interest up for sale for around $343 million, or £200M.
The 400-bed hotel close to and overlooking Hyde Park is a prime London property in a much sought after area popular with tourists’ and business travelers. Alex Hayward of Debutesq Group who have listed the hotel said “although the hotel has seen substantial investment over the past two or three years and is enjoying strong occupancy levels, a great deal could be done to improve revenue performance and investment return.”

There are various reconfiguration opportunities which could enhance the property including extending its 135,000 sq ft footprint.

Demand is strong for London hotels with occupancy rates increasing month on month and investor sentiment at its highest since the beginning of the global financial crisis. London has enjoyed a strong return since the recession and with the exception of Paris, is the only European gateway city where hotels are outperforming pre-crisis levels.  In 2013, London was the most invested in city in the world in terms of commercial real estate. 

Hotel values in London and other prime European cities have increased substantially in recent years with strong interest from wealthy Chinese investors and Sovereign wealth funds in the Middle East. Last year a Middle Eastern basted private investment group paid over $500 million (£300M) for a leasehold interest in the 447-bed Inter Continental on Park Lane representing an increase in book value of 62% since the end of 2012.   

Analysts predict London will soon become one of the world’s leading hotel markets on the back of strong visitor growth and the government’s decision to streamline UK visa applications from Chinese nationals. Overseas trips made by Chinese travelers is set to double over the next few years to 200 million and their average spend in the UK has been growing at 44% since 2009. Chinese visitors are expected to spend over $1.7 billion (£1B) in the UK by 2017.