Despite headlines over the last 12 months being dominated by portents of economic doom over a potential hard Brexit and subdued growth for a number of other commercial sectors, the hotel sector in the South West is bucking this trend and has enjoyed an excellent 2017.
GVA has just launched its inaugural Hotels Economic and Property Market Review, providing an analysis of the hotel performance, supply and investment trends across the key UK markets that determined performance in 2017, and offering an outlook for the year ahead.
GVA’s report highlights that in 2017, investment transactions in the hotel industry across the UK exceeded £4billion while the number of overseas visitors and the popularity of domestic ‘staycations’ resulted in rising visitor numbers. The South West has benefitted considerably from this with other research from Barclays* suggesting 30% of UK residents who are intending to take ‘staycations’ are intending visit the region and 10% of overseas visitors visiting the UK intend to visit the South West.
These increased visitor numbers are reflected in the excellent performance of South West hotels in particular in 2017 with increases in occupancy, ADR (average daily rate) and RevPAR (revenue per available room) when compared with the previous year. The market in the South West has displayed a positive growth story, with a number of new openings and developments over the last 12 months such as the high profile opening of Lympstone Manor in Devon by celebrity chef Michael Caines; and the on-going conversion of the former Guildhall in Bristol city centre to a five star hotel to name just a couple.
The UK hotel market has continued to be popular amongst investors in 2017 with information from Property Data showing investment transactions in the hotel industry exceeding £4.8 billion, an increase of 53% on 2016. Investor appetite was present in the South West with Aprirose purchasing the 275-bed, four star Mercure Bristol Holland House hotel for £45 million to be run under the management of RBH.
John Coggins, GVA, said “The UK Hotel market is in good health despite wider economic and political uncertainty. The local market in the South West remains strong with rising returns and investment values encouraging prospective purchasers, operators and investors to consider opportunities in region.
“The increasing appetite for quality assets is encouraging and the market is likely to remain consistent in 2018”.