Interest in regions outside London have grown, despite the UK’s decision to leave the EU. The UK hotel sector saw transactions totaling £4.7 billion at the end of third quarter, up 27 percent on the year, according to brokerage Knight Frank, with portfolio activity accounting for 56 percent of investment and regional portfolio-investment transactions at £2.2 billion, far outstripping London.
The broker said this has led to the average price per room sold outside of London to rise considerably—over 50 percent—to approximately £150,000 per room, with a larger proportion of corporate, full-service hotels transacting in the mid- and upscale markets contributing to the rise.
“The diverse range of portfolio sales is evidence of the demand sought for quality hotel stock,” said Philippa Goldstein, hotel analyst at Knight Frank. According to the company, Liverpool currently has 1,161 rooms in the development pipeline with Manchester having the highest regional pipeline with 2,895 due by 2021. Hotels due to open include a Radisson Red and EasyHotel.
The city’s tourism association was cautious. Marcus Magee, co-chair of the Liverpool Hospitality Association and general manager of the city center Hilton Hotel, told the local press the association sees more conventions coming to the city, increasing the number of people staying on Friday and Saturday nights. “Sunday to Thursday remains our biggest challenge and we need a bigger corporate market to boost occupancy at those times,” said Magee. “The most important thing for us is to help create a strategy to make Liverpool a seven-day-a-week destination.”
The city is now a decade on from being named European City of Culture and has cemented its position as a leisure destination. It must now look to work culture to drive those extra nights.
A Significant Deal
UAE-based investment company Select Group, for example, recently completed the acquisition of LIverpool's iconic Echo Building, increasing the investor’s holdings in the city.
The redevelopment of the building, slated for completion in January 2020, will create a mixed-use destination totaling approximately 300,000 square feet in the commercial district. The building will include a 207-room Innside by Meliá hotel along with four new retail units, one leisure unit and two floors of office space.
“The sale of the Echo Building to Select Group reinforces the appeal of gateway UK cities like Liverpool to overseas capital and demonstrates the strong appetite for mixed-use developments supported by fixed-income hotel investments,” said Richard Dawes, director in the hotels team at Savills, which brokered the deal.
“Having deployed substantial capital in the city previously, we know Liverpool well and firmly believe it will deliver superior long-term rates of economic growth and increase in its attractiveness to other institutional investors,” added Rahail Aslam, group CEO, Select Group. “We are thrilled to contribute with the redevelopment of the Echo Building, a landmark project that will be a fantastic showcase for the Innside brand and extremely well-suited to corporate occupiers."
Katherine Doggrell is an editor at Hotel Analyst, the U.K.-based news analysis service for hotel investors.