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08 November 2016, London: Transactions in the UK hotel market are likely to be subdued until the terms of Britain’s exit from the Europeon Union become clearer and business confidence returns.

The latest Hotel Bulletin, published this week by HVS, AlixPartners and AM:PM, outlines the fact that hotel transactions in Q3 totalled £522m in value, nearly half of that recorded in Q3 2015. Total transactions for the year-to-date were also significantly below that of last year.

“There is still no strong indication of what form Brexit will take and this uncertainty has led to indecision and delays in hotel property transactions,” said HVS London chairman Russell Kett.

“While the sterling depreciation recorded since June will have materially impacted overseas investors, many will be looking to take advantage of favourable exchange rates, making it a good time to buy in the UK. However, economic uncertainties in the UK such as a rise in inflation and the potential of rising costs means that decisions are instead being delayed.

“The other impact we have seen is that investors with existing portfolios in the UK will have recorded significant valuation declines when converted into their home currencies.”

The quarterly Hotel Bulletin notes, however, that Asian investors have maintained their interest in the UK market. This year has seen Hong Kong’s YT Realty Group acquire a partial interest in a London Travelodge from Goldman Sachs for £42m, while China’s Junson Capital acquired the DoubleTree by Hilton London Docklands Riverside for a reported £80m.

Q3 also saw the sale and leaseback of the hub by Premier Inn development at King’s Cross for an estimated £85m by Legal and General, along with the merger of Marriott International and Starwood Hotels & Resorts creating the world’s largest hotel company.

“Interest in UK hotels, particularly in London, is still relatively strong,” said Kett. “We expect transactions will rise in the latter part of 2017 as the terms of the UK’s exit from the European Union become clearer following the expected triggering of Article 50 in the spring. By this time much of the uncertainty should have dissipated and investors’ confidence in acquiring UK hotels should have improved.”

Hotel Bulletin Q3 2016 reports that the UK’s tourism and hospitality sectors have received a short-term boost from the depreciated pound and the rise in foreign exchange movements. Hotel bookings in popular tourist locations rose in Q3, with Bath, for example, seeing average room rates rise by 9% compared with Q3 2015. Conversely hotels relying on corporate business recorded weaker growth in Q3 as business trips and conferences may have been put on hold.

“When the economic outlook seems clearer and confidence rises, demand for the hotel sector is likely to rise once again, particularly in London and those markets dominated by leisure business. Next year should be a great one for staycations as UK holiday-makers realise their pound will buy fewer dollars or euros,” said Russell Kett.

About HVS

HVS, the world’s leading consulting and services organization focused on the hotel, mixed-use, shared ownership, gaming, and leisure industries, was established in 1980. The company performs 4,500+ assignments each year for hotel and real estate owners, operators, investors, banks and developers worldwide. HVS principals are regarded as the leading experts in their respective regions of the globe. Through a network of some 35 offices and more than 350 professionals, HVS provides an unparalleled range of complementary services for the hospitality industry. HVS.com
Superior results through unrivalled hospitality intelligence. Everywhere

Contact: Linda Pettit, Tilburstow Media Partners or Russell Kett, Chairman, HVS

Linda@tilburstowmedia.co.uk / rkett@hvs.com / +44 13 4283 2866 / +44 (0) 20 7878 7701

About the HVS, AlixPartners and AM:PM Quarterly Hotel Bulletin

The Hotel Bulletin analyses demand, supply, pipeline and transactions in the hotel market in 12 cities across the UK. The information contained in this Press Release sets out a summary of the information contained in the Hotel Bulletin and should be read with and is subject to the terms, limitations and assumptions contained in the Hotel Bulletin.

About AlixPartners

In today’s fast paced global market timing is everything. You want to protect, grow or transform your business. To meet these challenges we offer clients small teams of highly qualified experts with profound sector and operational insight. Our clients include corporate boards and management, law firms, investment banks, investors and others who appreciate the candor, dedication, and transformative expertise of our teams. We will ensure insight drives action at that exact moment that is critical for success.

About AM:PM

AM:PM is a leading source of market intelligence on the UK & Ireland hotel industry. We maintain extensive data relating to hotel supply to help clients gain a comprehensive and unrivalled understanding of the size and structure of the hotel industry.

We offer a suite of subscription-based online products that allow clients to search, analyse and benchmark the hotel sector. This includes access to a unique hotel database with details of over one million hotel rooms covering the past, present and future hotel supply throughout the UK & Ireland.

We’re serious about hotels, AM:PM.

About HotStats

HotStats is a leading company providing profit and loss data to the hospitality industry in the EMEA. We go beyond RevPAR to focus on total revenues and profits conversion.

For further information, please visit www.hotstats.com, email enquiries@hotstats.com or call +44 (0) 20 7892 22 22.

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