Hotel market to remain buoyant in 2023 according to annual report

The reports suggests that the UK hotel market was a tale of two halves in 2022. There were positive signs of recovery across the sector during H1 however, throughout the second half of the year uncertainty began to creep in due to macroeconomic conditions and this slowed transactional activity, which translated into a 2.8% increase in Christie & Co’s hotel price index for 2022.

The report indicates that on average, Christie & Co sold two hotel businesses per week, a level slightly behind 2021, maintaining its position as the market leader for hotel deals by volume. This activity was dominated by individual asset sales across the regions as buyer appetite for quality assets in regional cities, semi urban or coastal locations remains strong.

Christie & Co’s market insights reveal there was a notable increase in closed assets being sold – about a third of all transactions compared to less than a fifth pre-COVID, albeit the vast majority of deals were for continued hotel use. Additionally, buyers have been expanding their radius search to find the right opportunities.

Looking to the year ahead, the report also outlines Christie & Co’s market predictions which are:

• The hotel sector is procyclical and RevPAR will soften in 2023 as the recession impacts discretionary spending and corporate activity
• The market will become more polarised with luxury and economy faring better compared to the mid-market which will be squeezed
• Pricing will have to adjust to reflect increasing debt costs and eroding profits.
• The softening in yields observed in Q4 2022 will continue
• A wall of capital is waiting for distressed opportunities to emerge; however, based on historical evidence, there may be a lag of up to 24-36 months
• Development will be challenged by the limited debt financing, rising interest rates, and volatility of construction costs

Carine Bonnejean, Managing Director of Hotels at Christie & Co comments, “As we ended 2022, ‘heaven and hell’ was a good representation of where the UK hotel market was, with many hotel operators holding off on selling and buyers adopting a ‘wait and see’ approach in anticipation of a price correction and an increased volume of distressed assets coming to market this year. Yet we have kicked off the new year with a strong pipeline of new instructions and advisory work and we anticipate renewed activity over the coming months. The majority (60%) of respondents who took part in a sentiment survey that we conducted at the end of 2022 indicated plans to buy and/or sell in 2023, suggesting the market will remain buoyant, despite facing the confluence of headwinds that are expected to exert pressure owners and operators this year.”

Click here to read the full report, ‘Business Outlook 2023: Finding Clarity’.

For further information on this press release, contact:
Bronte Hughes, Corporate Communications Manager

P: 020 7227 0794 or E: bronte.hughes@christie.com