The UK hotel sector last year saw investment volumes reach £5b including over £2.5b from foreign investors.
The £5b figure represents an increase of 35% year on year, according to property adviser Knight Frank. This is in addition to the sector achieving strong revenue per available room (revpar) levels, robust growth in gross operating profit per available room (goppar), and an increase in occupancy rates nationwide.
The success is built on strong fundamentals underpinning the sector, including a strong surge in portfolio activity and portfolio break-ups, meaning larger single assets available to the market and a strong hotel trading performance, both in London and the regions.
The weakened pound has continued to draw greater than anticipated tourist numbers and invited more domestic staycation holidays, which has ensured occupancy rate growth, with the regions seeing record high occupancy rates of 77%.
Julian Evans, head of healthcare, hotels and leisure at Knight Frank, said: “The UK hotel sector has witnessed a strong fourth quarter and overall a successful year, with a stable trading performance and a positive year of revenue and profits, underpinned by the strong boost in tourism and increased overseas investment, which we expect to continue into 2018.
“We predict that we will also see infrastructure funds and global investors start to acquire UK hotel portfolios, as they recognise the secure long-term income offered by the sector.
“However we anticipate that the resilience of the UK hotel sector will be persistently scrutinised in the uncertain times ahead and that growth in trading performance indicators is likely to be at a slower rate in 2018 than in the last year.”
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