UK HOTELS
Making room
Investment in current and new hotels plus oversupply signal a favourable market for buyers
By CATHERINE CHETWYND W
ITH ROBUST PIPELINES, STRONG OCCUPANCIES and reasonable revenue per available room (RevPAR), the British hotel scene
appears to be in good health. “Room rates were up 1.7 per cent and
RevPAR up 0.7 per cent for July year-to- date [YTD]; growth in the UK and the rest of Europe is ADR [average daily rate] driven,” says Thomas Emanuel, business development director of hotel data spe- cialist STR. “But because available rooms in the UK are growing at 2.1 per cent and demand at 1.1 per cent, occupancy is down 1 per cent.” London, in particular, is affected by high
supply. “No other city in Europe has seen growth on the same scale,” says Emanuel. Similarly, supply in Newcastle has grown by 10 per cent, resulting in a fall in occu-
72 BBT November/December 2016
pancy of 5 per cent YTD July, and Belfast has seen a decline of 0.2 per cent. Pipelines are healthy, with just over
43,000 keys in the UK, of which some 15,000 are in the capital, and most of the development is in the budget sector, particularly Whitbread’s Premier Inn and Travelodge. “People usually turn to budget hotels in a downturn, so if there is a Brexit recession, that would play to their advantage,” says hotel industry consultant Melvin Gold.
THE MONEY Starwood Capital recently launched The Principal Hotel Company, comprising two brands. The six city properties sail under the flag of Principal Hotels and have ben- efited from a £150 million facelift. After a £50 million investment, the group’s De Vere brand – country house hotels with modern conference and leisure facilities
– will relaunch in 2017. Over the years, Starwood Capital and its affiliates have bought Principal Hayley, De Vere Venues, Four Pillars and The Townhouse Collec- tion, plus individual assets, so it has a lot of bricks and mortar to play with. “Independently owned and run proper-
ties still represent just over half the rooms in the UK and that sector tends to lead in service and innovation,” says Gold. London and Regional has bought Cliveden House, Chewton Glen and the Lygon Arms, plus 50 Atlas hotels from Lone Star, run as Holiday Inn Expresses. Meanwhile, Jupiter Hotels has increased its portfolio to 29 hotels, having acquired Holiday Inn Darling- ton, Holiday Inn Dumfries and Mercure Sheffield Parkway Hotel. “We have a blanket franchise agreement with Accor for the Mercure brand, and the beauty of that is the hotels are an eclectic bunch, from a small 60-bed country house
BUYINGBUSINESSTRAVEL.COM
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