Glasgow’s hotel sector was described as a hot spot for developers, driven by growing demand from both corporate and leisure travellers.
The comments came as Premier Inn announced plans for five new hotels in Scotland, due to open this year.
Ben Farrell, associate director, investment, Avison Young, said: “Historically, hotels were perceived as alternative assets due to deal structures generally offering variable returns to investors. However, there has been a shift with hotels now very much mainstream investments and a core part of the overall Glasgow real estate evolution. Investor interest in the city remains very robust. There is now strong demand from both UK and European investors who wish to invest in high quality, well-maintained assets for a long period of time.”
A report by Avison Young forecast that the city’s hotel sector would continue to grow over the next decade, aided by increasing demand from leisure tourists, commercial sectors and conferences. This year was set to be a record year for Glasgow’s conference sector as a result of its hosting the 2020 United Nations Climate Change Conference, also known as COP26, in November.
Andrew Renouf, director, Avison Young said: “Glasgow is undergoing a significant transformation that is raising the profile of the city and resulting in strong economic growth. The hotel sector has been a core part of this and has become a hotspot for developers, operators and investors.
“This year, COP26 will be a key contributor to Glasgow’s hotel sector and will showcase the city on a global stage, ensuring an enduring legacy. When combined with a healthy events calendar and the UEFA Euro 2020 matches, it is widely expected that 2020 will see a return to strong performance for the city’s hotel market.”
Avison Young expected that an overall demand growth trajectory over the next 10 years would result in continued strong occupancy performance, which has been around 80% since 2014.
There were currently more than 2,200 rooms under construction and expected to be open by 2022. This growth was also supported by a pipeline of unconfirmed projects, with the group forecasting a greater variety in the types of hotels being delivered, which would likely include a broader range of modern, tech and design-led properties, to better appeal to the wider demographic of visitors to the city.
Premier Inn announced plans to open five new hotels in Scotland, including two new properties in Glasgow: a 96-room hotel in Hamilton (located around 12 miles southeast of Glasgow), and a 249-room property on the city’s St Enoch Square.
Premier Inn’s managing director Simon Ewins said: “We’re gearing up for an exciting year in Scotland with a variety of new hotels ranging from a 249-bed mega-hotel in one of Glasgow’s most iconic central locations to our most Northerly site in the UK in Thurso.
“From its world-class cities to jaw-dropping Highlands, Scotland’s tourist offer is hard-to-beat and we’re pleased to help make it even easier for both leisure and business travellers to enjoy the country affordably.”