GHN HOTEL MARKET WATCH


GlobalHotelNetwork.com: Where do you see the best opportunities for hotel investment or development? 

BDO UK LLP:  UK hotels experienced their ninth consecutive year of growth in 2018. Despite, and independent of the uncertainty surrounding the exit of the United Kingdom from the European Union, a decrease in visitor numbers and slower economic growth, UK hotels have proved resilient. The overall UK rooms yield rose by 1.1% to £78.64, helped by the strong performance of the London hotel market, which outperformed its regional counterparts. London hotels, reached the highest occupancy level ever recorded by BDO, at 83.6%.

With this background, it came at no surprise that the UK hotel market remained attractive for both local and overseas investors last year.

The volume of UK hotel transactions in 2018 showed an increase of 29% compared to 2017, totalling approximately £7.4bn. The positive figures seen in the UK, which continued to lead the European market, contrasted with those for the rest of Europe, which saw transaction volumes collectively down by approximately 14%.

Portfolio sales continued to dominate, accounting for approximately 70% of all UK hotel transactions volume. The regional market continued to gain importance in total transaction volumes reaching parity in terms of total transaction volumes with the London hotel market.

Looking into 2019, investor confidence in the UK hotel market is set to continue to be strong, supported by positive trading performance in 2018. We expect to see a number of disposals of single assets from the large acquired portfolios. Luxury hotels could be disposed from these portfolios to release higher value as opposed to the usual mid-scale or budget product.

There are currently over 17,800 rooms in the UK’s active hotel pipeline expected to open during 2019 and 2020. The figure represents a decrease of over 4,000 from a year ago but still represents one of the largest pipelines in Europe demonstrating the vibrancy of the UK hotel market.

London’s active pipeline accounts for approximately 35% of the UK’s total, with over 6,250 rooms under construction. This figure represents a 5% decrease in the share of the UK’s pipeline when compared with last year and approximately 20% less than in 2017.

Manchester, with 1,293 rooms under construction and expected to be opened during 2019 and 2020, continues to be the main regional development hotspot, followed closely by Glasgow (1,126) and Birmingham (917).

The positive outlook for visitor numbers, coupled with favourable exchange rates, particularly for overseas investors, are likely to keep attracting overseas investment into the London and regional markets, with the latter maintaining the momentum and increasing the share in total transactions and new rooms.”

GHN Thought Leaders

Robert Barnard

Partner

BDO UK LLP

Juan A. Gómez García

Hotel, Leisure and Tourism Research Manager

BDO UK LLP