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Credit crunch won't affect hotel market

12 November 2007 by
Credit crunch won't affect hotel market

The hotel market is unlikely to be affected by the credit crunch that has rocked the financial markets in the UK and the USA, according to property experts.

Christie & Co believes investors may indeed be "less bullish" in the future, but claims the sector will survive financial scares caused by the US mortgage crisis and the UK's Northern Rock difficulties.

Jeremy Hill, director and head of hotels at Christie & Co said strong trading was behind the fundamentally sound sector and the agent was "quietly confident" about next year's prospects.

Latest TRI Hospitality Consulting statistics show that in the seven months to July the UK hotel occupancy plateaued at about 74% - which, according to Hill, is probably as high as it's ever been. Average room rates increased by 6.9% to £86.02 and revenue per available room year-on-year rose by 7% to £63.73.

"This year has continued to see transactions take place, with few deals falling away," Hill said. "The trend from last year has continued, with good hotel opportunities on offer at all levels up to £4m driving sales to independent operators. Similarly, at the corporate level, equity investors are still keen to get a stake in the hotel businesses."

He added that interest rate hikes have had little impact. "Hovering at 5.75% they are nowhere near the 15-16% of the early 1990s… There continues to be good opportunities out there for investors, particularly as vendors' aspirations may not be as high as they were six months ago."

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By Helen Gilbert

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