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Hotel transactions set to remain strong in 2018

02 January 2018 by
Hotel transactions set to remain strong in 2018

Hotels continue to be an "attractive and popular" investment opportunity despite Brexit uncertainty, according to global real estate business Colliers International.

However, the company warned that the outlook for 2018 appears less certain for the casual dining sector.

A weaker sterling is expected to attract international buyers to UK hotels over the next 12 months with predictions of a steady year for hotel transactions.

Julian Troup, head of UK hotels agency at Colliers International, said: "Brexit concerns has done little, so far, to negatively affect the flow of hotel transactional activity throughout the UK.

"There continues to be considerable demand from both domestic and overseas buyers, as hotels continue to be an attractive and popular investment opportunity.

Troop added that there appears to be an increase in demand for UK provincial hotels, with interest from "international investors, who are attracted by weaker sterling; private purchasers, enticed by the benefits of a lifestyle opportunity; and corporate investors who are on the lookout for favourable returns and real estate alternatives".

He anticipated no material changes to the level of UK hotel transactional activity during 2018, so long as "Brexit negotiations do not impact negatively on consumer confidence, and consequently the UK economy".

Meanwhile, Colliers warned of casualties in the casual dining sector as customers turn to delivery services and experience attractions.

A cooling of the sector is forecast to lead to a broad stabalisation of rents, although prime pitches are expected to continue to see rental growth.

Ross Kirton, head of UK Leisure Agency at Colliers International, said: "The cooling of the casual dining sector could potentially impact the development pipeline, particularly in secondary locations.

"The casual dining sector is likely to undergo further structural change at group level with further casualties; those that succeed will be due to them placing more emphasis on service and experience.

"This is likely to lead to a broad stabilisation of rents and we anticipate the performance gap between average and prime locations to widen, with the best prime pitches still to enjoy rental growth."

Kirton has also predicted an emergence of delivery only restaurants and experience-led attractions over the next 12 months.

He believes the outlook is brighter for the high street bar market, which he expects to remain buoyant.

Hotel investments for 2017 set to beat last year's figures >>

European hotel investment surpasses €14b in 2017 >>

Casual dining restaurants return to discount vouchers >>

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