Chester is the number one hot spot for UK hotel development and acquisitions, according to Colliers International's latest UK Hotels Market Index.
The city's high position is mainly due to good occupancy levels, an upward revenue per available room (revpar) trend and a low active pipeline, said the real estate advisory firm.
York ranked second, moving four places up from last year, owing to good hotel performance and a positive revpar trend. Oxford was third, improving its ranking by 25 spots from last year due to an increase in buyer demand interest, a low active pipeline and good hotel market performance.
Other strong performers included Cambridge, which moved up 15 places from Belfast, which improved by 12 spaces; Nottingham (up 10 places); and Swindon (up nine).
London continued to be the largest market and in terms of revpar is still the top performing city. It also has the most active pipeline in terms of new rooms due to open over the next two years (13,499). However, London fell out of the top 10, to 12th place due to a 1.2% drop in revpar, a large development pipeline and high land costs.
Marc Finney, head of hotels and resorts consulting, Colliers International, said that the report revealed the ever-changing nature of the UK hotels market.
"Cities such as Oxford and Cambridge have really upped their game in the last year to make it into the top five, despite failing to score in the top 15 last year," he explained. "Of course, this is a general market index and site specific factors will lead to significant variances but the data demonstrates that London is not the only city that investors should be watching and offers a credible indication to influence their decision making process."
Each of the 34 locations within the report were scored according to nine Key Performance Indicators (KPIs), which included land site prices; build costs; market appetite; and average daily rate. The ratings were then ranked to show which markets are potentially desirable locations for investors to acquire an existing hotel or develop a new one.
Colliers International's top 10 UK hot spots for hotel investment and development:
Videos from The Caterer archives