In 2019 we have seen a notable decline in both transactional volume and deal count in the UK despite a number of significant transactions at record prices. However domestic and overseas investor appetite remains strong and the hotel market remains an attractive investment option.
The sector responds well to changing investor requirements by adapting operating structures and evolving and innovating brands with technology. However, we have also seen large amounts of development and an ongoing increase in the supply of hotel rooms in recent years. This, alongside the political and economic uncertainty influenced by Brexit, is contributing to a record drop in RevPAR in some markets. Markets with the right fundamentals will continue to see growth in 2020.
The hotel construction pipeline in the UK is currently the second largest in Europe, in terms of projects, after Germany. Approx. 225 hotels are currently underway across the UK, with London continuing to be the country’s development hot spot, notably in East London and the Southbank. Regional UK cities, such as Manchester, Glasgow and Bristol are expected to see double-digit growth in the current room supply by the end of 2022, with strong construction pipeline underway.
Positives in the sector
Brexit uncertainty will remain into 2020 as impacts on business travel, workforce and staffing issues continue from 2018/19. The general election will impact on business, legislation, taxation, customer confidence, currency etc. There is plenty of hotel development and we may see an impact on trade. There may also be a subsequent issue due to staffing concerns. We may also see performance issues due to underinvested assets, predominantly outside city centres.
Strong appetite in the South and major cities such as Manchester. This can be related back to the challenge of high demand and lack of availability. Also – this is a HUGE number of people per district – some markets inviting over 5,000 people searching for opportunity.
Managing Director – Hotels
T: 020 7227 0714