Thistle Hotels last week snubbed a would-be buyer who slashed its offer because of financial-market volatility. Vaux Group also lost a prospect and remains a wallflower. And Granada Group, Britain's leading hotel company, is still holding London's Grosvenor House hotel as buyers balk at the price.
What a difference a few months make. Earlier this year, a series of transactions included an agreement to sell luxury hotel operator Cliveden to a group of investors including Microsoft's Bill Gates, the Blackstone Group's purchase of the Savoy Hotel, and Patriot American Hospitality's acquisition of Arcadian.
"The pure investment organisations are stepping back," said Alex Kyriakidis, partner in charge of Arthur Andersen's worldwide hospitality and leisure services. "The euphoria associated with a growing industry has waned and people are looking more at the underlying economics of the deal."
The London hotel market, which accounts for 25 per cent of the UK's pounds 8.8bn industry, is expected to hold firm through a slowdown in consumer spending, though growth is easing. Arthur Andersen predicts growth in room yields will fall to 8-9 per cent a year through to 2000, from 10 per cent last year.
That has made potential acquirers look harder at what they are getting. Nomura International, named as Thistle's suitor, was reported to have cut its offer by as much as 10 per cent.
The collapse of talks "was a reflection of the price and the fact that Thistle has a mixed portfolio," said Bob Lewis, director of hotel property services at Pannell Kerr Foster. He added that predators "are still there but they are there for a particular type of property that they can put their brand into."
The US real-estate investment trusts, or Reits, which had spearheaded the UK onslaught have become less aggressive, though. They spent billions of dollars on acquisitions last year. This year, their shares have fallen as profit growth has slowed for US hotel operators, making it more difficult for them to pay for acquisitions with stock.
Also, the two largest hotel Reits, Sheraton-owner Starwood Hotels and Resorts and Patriot American Hospitality, are in the throes of changing their structure in response to a change in US tax law. This deprived them of a tax break on acquisitions of US hotels.
Host Marriott Corp, which is also to become a Reit, said it was not interested in acquisitions in the UK or the rest of Europe at current prices. Patriot American said that UK hotels still offered value, even though prices have risen. Paul Novak, executive vice-president of acquisitions and development, said the company wants to expand its Wyndham hotel brand in the UK and throughout Europe.
Arthur Andersen's Mr Kyriakidis said large international chains will be at the forefront of future acquisitions. Bass, the owner of the Holiday Inn and Inter-Continental, and France's Accor are among those tipped to snap up luxury properties.
"The UK market is pretty fragmented. We will see a little bit more cherry picking by the international chains," he said. "They will be able to increase yields."
Further consolidation could make life tough for smaller operators like Regal Hotel Group and Jarvis Hotel.
Pannell Kerr Foster's Mr Lewis predicts they will be increasingly squeezed by the international chains at one end, and budget hotels like Whitbread's Travel Innat the other. "They will have to get bigger to survive," he said.
Others may resort to marketing alliances and shared systems to achieve economies of scale.
Stephen Bollenbach, chief executive of Hilton Hotels, said last month that the prevailing capital market conditions "probably precluded" a merger with Ladbroke Group.
Mr Bollenbach said the companies would concentrate instead on their alliance, whereby they share a logo, reward programmes, reservation systems and collaborate on advertising.