UK hotel investment volumes set to smash 2016 figures by 25%

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UK hotel investment is set to reach £5.1bn by the end of 2017, a figure which is 25% up on the 2016 total of £4bn.

The results, collated by Savills, showed that at the end of Q3 2017, transaction volumes had reached £3.5bn for the year to date, up 6.1% on the same period last year, with more activity forecast for Q4.

While overseas buyers continue to be major investors in London, Savills reports that it is their activity in the UK regions that has been most noteworthy.

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Thus far in 2017, overseas investors have accounted for 38% of hotel transaction volumes in the UK regions, a sharp rise on their 7.3% share in 2016.

Key regional transactions to take place this year involving international investors include Starwood Capital’s purchase of the Holiday Inn Manchester City Centre for £54.5m and Singaporean-based CDL buying the Lowry Hotel Manchester for £52.5m.

Martin Rogers, head of UK hotel transactions at Savills, comments: “Operationally, UK hotels have actually benefited from Brexit with the weaker Pound increasing demand from overseas visitors and those on ‘staycations’. With international travel forecast to expand globally and the UK to remain a key destination market, the operational fundamentals going forward mean that hotels remain an attractive asset class.”

Rob Stapleton, director in the hotels agency team at Savills, adds: “While some of the increased activity by investors in the UK regions is in response to a lack of available assets and price constraints in London, it also reflects an increased level of comfort among overseas investors with the regional markets, particularly key cities such as Manchester and Edinburgh.”

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