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Hotels

Christie & Co sells more hotels than any other broker and has an unrivalled level of market intelligence compiled over more than 80 years.

The UK hotel market has seen increased transactional activity since the end of 2013 which was initially fuelled by the US Opportunity Funds and Private Equity investors. This investment interest however, has subsequently been augmented by hotel investors from the Middle East and more latterly, Asia. 

In 2014 US hotel investors were predominantly looking for large scale portfolios and platform opportunities as they strived to capitalise on the resurgent provincial UK trading market and attractive yield profiles. Recently, however, there has been a shift in focus from these investors as they seek to identify single asset opportunities to bolt onto existing portfolios. Through 2015, we saw portfolio buyers from Asian markets looking to acquire strategic platforms in order to satisfy the requirement for the development of capital outside Asia and fulfil increasing tourist demand coming from the Asian sector. In reference to Asian investors, this includes countries such as Singapore, Hong Kong, Macau, Thailand and Malaysia etc., as well as China.

Typically the more attractive properties to hotel investors are those which either currently trade under, or have the potential to be rebranded to a recognisable international hotel brand. We have also witnessed a desire from an increasing number of investors to purchase hotels requiring capital investment with the intent to reposition the hotel and its market, therefore benefiting from the resultant improvement in financial trading characteristics and consequently, overall value enhancement. 

The provincial UK trading market is continuing to change as certain markets experience significant growth on previous years, an outcome derived by corporate and leisure business returning from the depths of recession. This has led to consecutive years of RevPAR escalation, whereas London's growth has remained fairly flat (from an already high base of Occ and ADR). This has resulted in investors focusing their attention more and more on provincial UK assets as their preferred investment targets, while London remains the focus of attention for the “trophy” seekers.

If you are thinking about your next property investment and require specific performance and transactional activity to uncover potential sales or purchase opportunities, please contact our team.

80 +

hotel professionals across the 16 UK and 16 European offices
 

500 +

hotels currently available for sale with a value of over €2bn

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Hotels for sale - trends in the regions

The hotel market recovery we saw in 2014 continued in 2015 with increased activity across both transactional and valuation services in most of our regional markets.

The North in particular enjoyed an upswing in the hospitality and leisure sectors. Demand for good quality hotels of more than 25 bedrooms is now outstripping supply. In the main buyers are looking to acquire hotels that have seen continued investment and that are generally well presented with higher occupancy and higher than average room rates. Coupled with the appetite of banks to support experienced operators and well-funded investors backed by strong management teams, many shrewd operators have decided to take advantage of strong demand to secure sales at premiums not seen since the peak of the market in 2007. The buyer profile in the North has also shifted with an increasing number of overseas buyers from China, Malaysia and India in addition to the experienced regional operators and high net worth individuals.

A shortage of supply is also at work in the Midlands and Anglia region which is also enjoying improving levels of confidence driven by better bank liquidity and a far more active market. There is greater demand for larger/corporate operations here, which offer more bank security. At the smaller end of the market, sub £500k properties and B&Bs remain challenging, particularly on the coast, as a higher proportion of the value is in the real estate. Buyers are looking for established operations with growth potential and in good condition particularly in urban/strong trading locations,  as well as hotels with facilities to enable the operator to drive alternate income as businesses return to spending money on conferencing. The buyer profile here has widened to include more experienced operators, particularly those with existing assets or those who have sold and have good cash deposits.

In the South we are seeing institutional, private equity and international buyers with appetite for the larger and better quality hotels in London, the South East and M25 fringes. There is strong demand for 100+ bed (preferably branded) hotels, while for the mid range hotels, demand is good, however, pricing is sensitive. The business has to have strong trade, or be priced competitively to attract buyers. Demand for lower end (seasonal) smaller hotels and guest houses is more sporadic. The lifestyle market is improving with cash purchasers able to complete transactions as debt funding these purchases is still challenging.

The South West is experiencing an improving climate, not just from a transactional perspective but also from the trading performance. Hoteliers here are also reporting an increase in the number of visitors to the UK. Our successes over the past three years have come from quality, profitable coastal hotels with 15+ letting bedrooms and those which can offer development opportunities such as constructing self catering/holiday cottages. 

The Scottish market is slowly improving as banks return to lending to private operators, albeit at reduced levels. Although a long way from the buoyant conditions of 2007, the market has improved over the past two years. There was a definite lull before and immediately after the Scottish referendum and there remains a little uncertainty from buyers in England who may have looked at lifestyle businesses north of the border previously.

If you’re looking to buy your first hotel, guest house or bed & breakfast, or are an owner, operator or investor looking to add to your portfolio, our expert team will bring decades of experience to the entire buying and selling process.

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