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UK secures top spot as Europe’s top hotel investment destination

Our Experience. Your Success.©

THIS week it was announced that the UK has been named Europe’s top destination for hotel investment. Here, Nicholas Northam – Interstate Europe Hotels & Resorts Managing Director for the UK - gives his insight into the findings published by CBRE’s European Hotel Investor Intentions Survey 2018.

With a record-breaking 2017 which saw the UK hotel sector attract the highest level of hotel investment volume of all European countries - £5.4b - it’s little surprise that the United Kingdom took first place in the CBRE’s European Hotel Investor Intentions Survey 2018.

Thirty-five per cent of respondents selected the UK as the most ‘attractive target for hotel investment’ – an increase on last year’s results. So what is it about the UK that makes it such an attractive place for investors?

Location, Location, Location

Firstly, here in the UK we have numerous well known visitor ‘hotspot’ locations, including cities such as London, Edinburgh, York and Belfast, and areas of natural beauty and open countryside such as the Yorkshire Dales, The Cotswolds and The Peak District.

These locations and their surrounding areas provide a wealth of opportunity for hotel investors to join the market and capitalise on the tourism trade, which in many places is booming as inbound visitor numbers increase and more UK residents opt for a ‘staycation’.

Here at Interstate we work with investors to help them choose which location would be right for their hotel and, in turn, what style and size of hotel would suit that area’s market.

The value of the pound

It’s no secret that the past year or so has seen huge fluctuations in the pound’s value.

A general election, ongoing Brexit talks and a widespread feeling of uncertainty has seen the UK’s currency dip, meaning foreign investors can often get more for their money here than ever before – especially in the areas outside of the capital.

Combined with an increase in visitor numbers, investing in a hotel in the UK makes a lot of sense for those seeking a good return and a stable revenue source.

However, moving forward, investors must be mindful of the cost of goods and services. While the value of the pound can often spell a good deal for a property purchase, the ongoing costs of running a hotel – especially when it comes to imported goods and services - need to be carefully scrutinised.  

Our team at Interstate all have a wealth of experience in this area and manage this process on investors’ behalf, to ensure their hotels remain profitable.

The rise of third-party hotel management

An increase in investment in the UK’s hotel sector has of course increased the demand for hotel management services.

In turn, more investors are understanding the benefits of outsourcing the day-to-day operation and commercial management of their hotel.

Employing a third-party management company allows investors to focus on growing their wider business and provides them with access to expert advice on everything from the initial purchase of a property through to the day-to-day operational tasks. 

This increase in interest in hotel management is evident in our own results.

At Interstate our own UK portfolio has increased dramatically in the last three years, and today it stands at more than 70 operation hotels, with plenty more in the pipeline.

In 2018 alone we’ve opened numerous hotels across the UK, including the AC Hotel Belfast and Hotel Indigo Durham in recent weeks. We’ve also recently announced several new management contracts at locations including the Ramada Encore in Bournemouth and the forthcoming Merrow Hotel and Spa development at Portstewart.

The wider success of the UK’s hotel investment market is great news for owners and investors, and as one of the UK’s leading third party hotel management firms, we look forward to helping the market grow further in the months and years to come.