Colliers predicts good 2017 for regional UK hotels

Photo by Joe Dunckley (Cotswolds)

In spite of concerns over what the Brexit will mean for the UK’s economy as a whole and hotel industry in particular, some areas of the country may see a boost in 2017. Hospitality sector specialists at Colliers International are predicting that the UK regional hotels market will be supported by low interest rates, the depreciated pound, solid trading, "acquisitive domestic buyers" and an increasing flow of international capital this year.

Hotels director Peter Brunt is predicting that the Cotswolds market in particular could be particularly strong. And he should know: Brunt was involved in brokering 11 sales worth more than £11 million in the Cotswolds last year.

“Operators are already feeling the increased demand from overseas visitors, and this is one of the reasons fueling a strong demand for hospitality businesses in the region,” Brunt said. “The last quarter of 2016 saw a noticeable uptick of enquiries from buyers seeking a business in the region including a number of overseas high net worth individuals or corporations seeking investments in Britain.”

Furthermore, Brunt said, low interest rates and poorly performing savings accounts, ISAs and pension schemes could encourage investment in the solid hospitality sector across a range of verticals (hotels, pubs and B&Bs). As noted earlier this week, thanks to the UK’s tax policy on B&Bs, that segment of the industry is particularly appealing to investors, especially newcomers looking to take baby steps into the industry.

“The UK hotel market is a consumer-driven real estate sector, so its performance is closely linked to the overall general economy,” Julian Troup, head of UK Hotels Agency at Colliers International, added. “With a few new supply-driven exceptions, the UK regional market will be supported by low interest rates, solid UK trading, acquisitive domestic buyers and an increasing flow of international capital attracted, in part, by cheap sterling.”

“If our inquiry levels are any indicator of the market, it seems more people than ever are seeking to use their pension pot to build a new lifestyle business,” Brunt said. “Poor investor returns as a result of ultra-low interest rates are encouraging more people to search for alternative investment opportunities. Buyer numbers are rising commensurately. With improving access to finance we are seeing more competitive bidding for opportunities than seen at any time since 2007.”

Brunt also noted that, with the pound losing value, UK citizens are opting for “staycations” rather than changing currency abroad, and international travelers are finding the UK more affordable for longer stays.