UK regional hotel activity set to soar as supply grows and investors eye opportunities


Hotel markets in the UK’s key regional cities are set to take off as increasing supply and new mixed use developments tempt businesses and tourists alike, according to JLL.

According to new research examining the key trends across the UK’s regions, Leeds, Manchester, Edinburgh and Birmingham are expected to see a combined 4,886 new rooms open over the next couple of years.

Birmingham and Manchester are the best two performing markets based on RevPAR growth.

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In Birmingham there are eight hotels in the pipeline expected to open in the next two years, while Manchester 1,920 rooms are expected to enter the market by 2018, driven by improved infrastructure and capital investment across the cities.

Birmingham, Leeds and Edinburgh have all seen increased occupancy rates over the past year as a combination of buoyant business environment and weak sterling create demand from corporate and leisure visitation from both UK and abroad.

Initiatives such as the ‘Edinburgh 12’ which is a plan to progress 12 mixed use sites across the city by 2020, Manchester’s Airport City development and Hammerson’s new £165m Victoria Gate retail development in Leeds are all driving the attraction of these cities to tourists and corporate occupiers alike.

While UK hotel investment transactions in the first half of 2016 declined compared to the same period in 2015, the regional UK market secured the vast majority of total volumes at c£1.1 billion.

Kerr Young, director in JLL’s Hotels & Hospitality Group, commented: “As corporates expand their HQ reach beyond London and the UK becomes a more affordable and accessible place to visit for overseas tourists from China and the US, we are seeing strong growth in the hospitality sectors across the UK regions.

“We are also seeing that councils such as Manchester’s are adopting a proactive approach to new hotel development as business and tourism grows.

“London has long been a focus for hotel investment, but now regional market is witnessing the benefit of interest from overseas investors following the weakening of the pound. Despite initial uncertainly in the immediate aftermath of the recently EU referendum there is positive story around the UK in terms of macro economic stability and transparent transactional environment.

“This is demonstrated by recent deals such as the acquisition of the Premier Inn, Morrison Street, Edinburgh by Israel based Leonardo Hotels and the purchase of the Glasshouse, Edinburgh by Malaysia-based YTL Hotels. Hyatt also recently sold the Hyatt Regency Birmingham to United Arab Emirates based Bin Otaiba Investment Group.”



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