Christie & Co transacts, values and advises on hundreds of hotels a year. Our head office in London is supported by a network of 30 offices throughout the UK, Europe and Asia, giving us an intimate knowledge of both local and international markets. Whether you're thinking about your next hotel investment, disposal, development play or are in need of strategic or valuation advice, our hotels team is well placed to assist you.
Market overview – a stellar year for UK hotel sector
The hotel market has enjoyed a stellar 2017 as one of the few beneficiaries of the impending Brexit, as the declining Pound boosted leisure travel from Europe, the US and China: 39m visitors spent more than $25bn. A weaker pound also lifted staycations which further helped to drive up occupancy and RevPAR in both London and the regional UK.
Yet the year was not without some challenges: Brexit uncertainty has increased pressure on finding and retaining talent, whilst rising costs, particularly payroll and business rates, have pressured margins, and are likely to persist for the next few years. Despite this, we remain optimistic of the market’s ability to deal with these challenges innovatively.
In transactional terms, 2017 ended with total sales of c.£5.3bn, up almost 18% year-on-year. A sizeable portion of this was due to individually significant transactions, including the £800m acquisition of the Jury’s Inn portfolio by Pandox, the £600m sale of Grosvenor House to Ashkenazy Acquisition Corp, the £525m sale of Qhotels to Aprirose, and the £500m sale of the London and Birmingham Hilton Metropoles to Henderson Park.
On our part, we sold more than 150 hotels last year, including sales for Starwood Capital, Lone Star/Hudson (including a portfolio of MGallerys), the Crown Spa Scarborough, Broome Park Estate and a number of Mercure-branded hotels. The majority of our attention was focused on single-asset hotels valued at up to £25m, and portfolio transactions in the “up to £300m” bracket - the market in both of these categories has been incredibly active, supported by both excellent liquidity in the UK lending market (provided by banks, financial institutions, peer-to-peer lending and even crowdfunding) and a deluge of buyers, from affluent individuals and familial institutions to life funds and overseas buyers, who are increasingly interested in both the practical, long-term investments that the regional UK can provide, as well as the opportunity to sharpen yields.
Outlook for 2018
Technology and how customers interact with hotels is undergoing a seismic shift. Innovations such as keyless entry via phone, service automation (letting you check in and out independently), and better connectivity (with more apps and better bandwidth) are here to stay. We anticipate further innovation in what is often an sub-optimal food and beverage offer, as customer demands shift to include pop-up cafés and chef residencies, as well as more specialist food and delivery options.
Transaction volumes during 2018 are expected to remain broadly consistent at around £5bn. We continue to expand our cross-border work and to advance our market share in these sectors. Both US and UK private equity houses are increasingly interested in Europe and we are well-placed to capitalise as they consider new opportunities, such as the rise in interest in serviced apartments and hostels.