Why UK hotel investment is booming

730 565 Hamish Kilburn
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Why UK hotel investment is booming

Real estate professionals from Fieldfisher believe that the low sterling exchange rate is why UK hotels have becoming more affordable, while Colliers  International UK identify mass investment in tier-two cities…

Despite the political landscape of the UK hanging in the balance at the moment, hotel development experts and real estate professionals have identified that UK hotel investment is booming, with a major focus on tier two cities.

European law firm Fieldfisher, which represents hotel developers such as Dominvs Group, Easy Hotel, Millennium & Copthorne Hotels, Morgans Hotels and Searni Hotels as well as their investors has identified some of the reasons why UK hotel investment is performing particularly strongly at the moment.

The low exchange rate, the genuine shortage of stock in real estate investment sector and the rise in budget brands are among the main factors identified by the firm and real estate experts Fieldfisher.

Paul Houston, a real estate partner and head of the hotels and leisure practice at Fieldfisher, has produced announced a comment on why UK hotel investments in particular are performing so strongly at the moment – although we are also seeing very strong growth in Spanish hotels as well – which is partly to do with innovation in the sector and offering new kinds of services tailored to the needs of business travellers and guests on tight budgets.

In a statement, Houston said: “The hotels and leisure sector is very buoyant at the moment.

“The low sterling exchange rate has made UK hotels that much more affordable – both for tourists to stay in and for international investors to build – and because hotels are prime real estate, they are good investments for people who want long-term capital growth.

“The genuine shortage of stock in the real estate investment sector has led institutions to look at alternative asset classes and hotels have been one of the main beneficiaries. Where funds would have traditionally invested in office, retail, logistics or industrial assets – they will now look at hotels.

“Hotels are also fighting back against the big accommodation sharing sites with more budget brands. They are re-engineering the hotel offering with more basic, more affordable accommodation which often provides a better, more consistent product than alternative short-term rentals  – which is important for business travellers. And there is a lot of business travel happening right now.

“The acquisition of a hotel may be a pure property transaction, but quite often hotels sit within a corporate wrapper, meaning the transaction involves the full gamut of property, finance, franchising, employment, tax and corporate legal matters – which is good news for advisers to this sector.”

The comment from the law firm follows another report that was published this from Colliers International UK Hotels Market Index highlighted that Edinburgh remains the number-one location for hotel investment.

Marc Finney, head of hotels and resorts consulting at Colliers International, stated: “The UK hotel market adds about 10,000 new rooms each year and this has increased in pace recently, with almost 18,000 new rooms expected to open in 2019. This leaves hotels as a rare bright spot in a property market that is facing challenges in other sectors.”

The top 10 UK spots for hotel investment and development are as follows:

1 Edinburgh
2 Belfast
3 Liverpool
4 Chester
5 Bath
6 London
7 Glasgow
8 Brighton
9 Cambridge
10 Leeds

To have your say on this topic, please tweet us at @HotelDesigns.

Hamish Kilburn / 02.04.2019

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