International consultancy HVS has revealed European hotel sector investment activity showed signs of improvement last year, following a 9 per cent growth in total transaction volume.

HVS London's annual European Hotel Transactions study saw total volume increase to EUR7.1bn (£6bn), compared with EUR6.5bn (£5.5bn) in 2010.

However, the report also found that activity continues to remain well below the 2006 peak of EUR20bn (£17bn), as well as the 10-year average of EUR9.9bn (£8.4bn).

The increase in investment activity last year has been attributed to improved demand in both the leisure and business markets, which has made the sector more attractive to investors.

Meanwhile, a number of distressed assets came up for sale over the past 12 months, such as the von Essen portfolio of 28 properties - all but two of which are located in the UK.

Charles Human, managing director HVS Hodges Ward Elliott - the group's hotel brokerage and investment banking arm, said: "In 2011 there was a growth in both trading performance and hotel values across Europe indicating that recovery is under way.

"In 2012, we are likely to see a marginal increase in the number of distressed sales but, with debt so hard to find, it will be some time before we see transaction volumes return to pre-credit crunch levels."

Details: www.hvs.com (PDF)

Image: Thornbury Castle Hotel, one of seven von Essen hotels acquired by Halcyon Hotels and Resorts in December 2011