RECOVERY CAN FINALLY START
In March 2020, the world virtually halted. Hotels, pubs and restaurants around the country closed – an unprecedented cataclysm in the UK hotel sector. Various government measures were implemented to support the industry and save as many businesses and jobs as possible.
103 days later, hotels in England were given the go-ahead to reopen on Saturday 4th July (soon to be branded England’s COVID-19 Independence Day) 13th July in Wales and 15th July in Scotland and cautious optimism is now filtering through the industry as owners across the country finesse their reopening and social distancing plans over the next few weeks.
As we enter the summer period, booking websites and reservation platforms are reporting unprecedented levels of enquiries as domestic guests are keen to escape for a leisure break in seaside and rural destinations. This provides a great opportunity for some hotels to capitalise on this short-term demand boost and collect some well-needed cash liquidity.
Fast forward post summer and the market outlook is more uncertain. International travel and business demand, most particularly MICE, will take time to recover and we don’t anticipate the market to return to pre COVID levels until 2022 at the earliest. Unfortunately, over-rented or over-leveraged hotels may not be able to wait that long and we have already seen few casualties. Additionally, government support is being slowly phased out and deferred payments will start again to impact cash flows. As such, we do expect to see a pickup in distressed situations towards the later part of 2020/ early 2021.
A RESURGENCE OF THE RURAL AND COASTAL MARKET
As soon as lockdown restrictions were lifted we witnessed a surge in buyer enquiries and viewings of hotel opportunities. Investor demand is still very strong for hotel businesses and they are actively chasing opportunities in the current market – closed or existing.
Many investors are looking for under-invested properties with potential for repositioning or conversion to other uses, notably care homes or residential, and can often pay a premium for the right opportunities. Since the initial easing of lockdown restrictions at the end of April, buyer activity for hotels on our website has increased by 84%. There is a notable increase in searches for rural and coastal businesses as many buyers are now looking to relocate from the more densely-populated towns and cities. Additionally, the continued low interest rates and the rise in unemployment on the horizon will potentially lead people to look for other investment/career opportunities and operational real estate provides an attractive proposition for many people.
More than ever, cash is king as debt financing remains challenging. Cash buyers have been particularly active and are able to quickly close deals.
This is clearly demonstrated by the selection of deals agreed and successful completions listed overleaf. London also remains an investment hotspot for domestic and international investors as demonstrated by the Chrysos deal in the midst of lockdown.
On the advisory side, we have also witnessed increased activity in development appraisals, strategic estate reviews to identify potential liquidity levers as well as lease advisory.
ABOUT CHRISTIE & CO
With one of the largest teams in the industry dedicated to providing our clients with the most comprehensive service across the country, we have a unique insight into regional markets, and a strong relationship with operators at all levels.
To understand further about how Christie & Co can help you achieve your business strategies, please get in contact with any one of our team below: