Despite prevailing economic uncertainty in a world post-Brexit, promising growth opportunities await for savvy hotel investors.
Following the outcome of the 23 June 2016 UK referendum on EU membership, the country entered a period of political, economic and financial volatility. However, in many ways the impact of the referendum has made the UK increasingly attractive to investors, with the weaker pound already encouraging staycations and inbound tourism, which will in turn create further opportunities for the UK hotel industry.
In addition, inward capital flows from investors, particularly those in Asia who continue to seek to acquire strategic assets and platforms in the UK, demonstrate confidence in the long-term prospects for the country. With a new Prime Minister and Cabinet now in office, the political outlook has stabilised, and the UK government continues to convey its message that the UK remains open for business. In our view, there continues to be a wealth of opportunities in the UK, and those investors who can keep their composure will be rewarded in the medium term.
Typically the properties which are most attractive to hotel investors are those which are either branded or offer rebranding opportunities. We have also witnessed a desire from an increasing number of investors to purchase hotels where there are asset management opportunities to reposition the hotel or improve cash flows.
There is strong variance in hotel performance across regional UK markets. Many regional markets are experiencing consecutive year-on-year RevPAR growth, though most still trade at a discount to pre-recessionary levels from the trading heights of 2006-2007. Additionally, while the global appeal of central London hotels remains strong, recent trading fundamentals may have softened, albeit on a relative basis.
Whether you are thinking about your next property investment, asset disposal or are in need of strategic or valuation advice, Christie & Co’s hotels team is well placed to assist you.