UK Hotel, Tourism & Leisure Monthly Round-Up, Oct 2023
By Malcolm Kerr on 7. November 2023
Stellar UK performance is getting the attention of international hotel buyers…
UK market performance may be attracting investor interest in the hotel market but there has yet to be a significant upturn in transaction volumes as the gap between buyer and seller expectations remains.
There are signs that ADR growth in key markets, including London has levelled off following exceptional rises in the first half of the year and are now increasing at a more “normal level”.
…but access to finance and rising interest rates are holding back new hotel development..
Crowe’s Real Estate Outlook series – part four explores how the Real Estate industry is responding to increased cost challenges people challenges. 31% of those surveyed are concerned about access to finance and rising interest rates in the next twelve months.
A relatively slow new build hotel pipeline, constrained by rising costs and lender caution, seems set to limit net hotel room growth in the medium term.
…and the termination of Asylum accommodation contracts, could place pressure on owners in several markets
As home office contracts end, some locations could see a flood of hotel rooms returning to the market over the winter, although it has been suggested that as much as 70% of closed independent hotels may not return to hotel use. Careful transition planning will be critical for for hotel owners and investors.
Read Malcolm’s article “Asylum Accommodation Contracts – the next chapter for hotels” here.
Sports stadiums and event venues offer innovative opportunities for new hotel development…
Despite a challenging development environment major event venues and state of the art attractions still offer a strong business case for new-build hotels.
Stadium owners are increasingly looking to integrate hotels into their venues. While demand is underwritten their respective sports calendar, with the elevation of women in sports and the use of sport venues as multi-purpose performance venues, demand for the venues and attached hotels can be more stabilised than ever before.
UK is clearly a sought-after destination for state-of-the-art performance venues with talk of London getting its’ own version of the revolutionary Sphere that was recently launched in Las Vegas with U2 concert unlike one ever experienced before.
…while the luxury sector hopes to get a boost from high profile global guides.
Luxury hotels worldwide will be keen to feature in The World’s 50 Best’s hotel list and the Michelin Guides recently announced Michelin Keys. For both companies, it is their first foray into hotels, expanding on their traditional F&B reviews and ratings.
It will be interesting to see whether inclusion in these lists will have direct impact on revenue and values of rightly rated properties.