13 February 2017 | Hotels

The Year of the Rooster brings investment from the Far East

Chinese New Year fell on 28th January, with a fortnight of festivities culminating with the Lantern Festival on 11th February. Hopefully this will cast some light on the likely trends which we will encounter in this the year of the “Rooster".

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Jeremy Jones
Head of Brokerage - Hotels

What has become very apparent in 2017 is that the well funded Far East and Asian investors who have been historically attracted to London and the south east have now discovered the appealing opportunities on offer across the regions of the UK.

Positive trading fundamentals, substantial exposure to property and ease of access to cheap debt have been further enhanced by highly attractive sterling exchange rates which have increased the appetite and firepower for many of these individual investors.

New Asian buyers heading to the UK with highly flexible investment criteria is an exciting development and for them, profitable hotels trading in traditional UK coastal resorts or town centres across the UK are now very much on their shopping list. Others are keen to focus on the UK markets which appeal to the inbound Far East leisure traveller. These include markets such as Stratford-upon-Avon or Oxfordshire which provide easy access to Bicester Village or known leisure attractions.

At the other end of the deal size spectrum, recent CTS's acquisition of Kew Green Hotels enabled them to capitalise on the increasing number of Chinese and Asian travellers to the UK. Whilst these hotels are branded Holiday Inn in the main, subtle menu and operational adjustments are being made to ensure the creature comforts of the Asian traveller are met.

Factors such Chinese tourist spend being likely to top £1bn in the UK during 2017 and the simplified tourist visa making it far easier for these tourists to visit the country, also serves to encourage investors to acquire hospitality businesses in the UK.

We work closely with our Asia desk and, assisted by their extensive network, not a month goes by without the hotels team at Christie & Co encountering yet more high quality investors from across mainland China, Hong Kong, Singapore, Malaysia, Thailand and Korea, further evidence of this positive trend.

With budgets ranging from £500,000 to tens of millions, potential buyers are deal driven and will travel within the UK to find opportunities to match their budgets. However, many investors do have a lack of any operational experience in the hotel and hospitality space and as a consequence there has been a growth in management platforms created specifically around these investors. Leading among these companies is Compass Hospitality, which whilst headquartered in Bangkok, Thailand, has quickly established a UK management structure to service the needs of the variety of investors from across their region and currently manage 10 hotels in the UK and 30 across Asia.

So, the Year of the Rooster looks set to be a bumper one for private and group operators looking to sell their hotels as they will be able to capitalise on these Far East buyers.

Gong hei fat choy!

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