The UK hotel market is displaying signs of "a cyclical upturn", with a strong and consistent demand for room bookings in spite of additional supply, according to new research published today.
An increase in room rates and occupancies, a busy period of new openings and a growth in hotel transactions are all cited as helping inject renewed confidence among UK hoteliers by the Hotel Bulletin Q2 2014, published by AM:PM, HVS and Zolfo Cooper.
Eight of 12 cities reviewed have now returned to pre-downturn revenue per available room (revpar) levels, said the report, with Aberdeen, Bath, Edinburgh and London generating revpar levels far in excess of 2008 figures.
Belfast, Birmingham, Liverpool and Newcastle are the only cities yet to fully recover from the economic downturn. However, the report noted, that given recent revpar improvements and continuing investment in these cities, it is unlikely they will take long to surpass pre-downturn revpar levels.
Meanwhile, the supply of new hotels is on-going, with half of all openings accounted for by the budget sector.
"It is a market that continues to be dominated by brands, with 66% of current supply and 98% of active pipeline being branded," the report said. "Independent hoteliers in this sector may rightly be concerned about being squeezed out of the market."
Notable new opening in the last quarter include five Premier Inn in London, Glasgow and Wigan, with one of the new budget brands, Z Hotels (pictured), launching in a prime site in London's Piccadilly; while the luxury sector saw the opening of the 202-bedroom Shangri-La at the Shard London.
Further evidence of an upturn is the increase in hotel transactions, which exceeded £1.9b during the first six months of the year. Over £411m of transactions completed in the second quarter of 2014, compared to the £154m completed during the same period last year.
While the majority of transaction during Q2 2014 were for single assets, this trend is likely to change in the remained of the year.
The report noted that so far this quarter, Hallmark Hotels, 144 Travelodge hotels, 11 QMH hotels and 19 LRG hotels have been sold to new owners. Other portfolios set to change hands before the end of the year include De Vere Hotel and De Vere Village Urban Resorts.