Christie & Co released its annual Business Outlook report today, which predicts mid-market hotels will be worse off in 2023.
The report from the specialist business property adviser claims the market will become more polarised over the next 12 months, with luxury and economy models faring better compared to the mid-market which will be squeezed.
Other predictions for the year ahead include prices going up to reflect increasing debt costs and eroding profits and development being challenged by limited debt financing, rising interest rates, and the volatility of construction costs.
The ‘Business Outlook 2023 Finding Clarity’ report reflects on key market activity, trends and challenges of 2022 and forecasts what 2023 might bring across the industries in which Christie & Co operates, including the hotel sector.
The report suggests the UK hotel market was a tale of two halves in 2022. There were positive signs of recovery across the sector during H1 however, throughout the second half of the year uncertainty began to creep in due to macroeconomic conditions and this slowed transactional activity, which translated into a 2.8% increase in Christie & Co’s hotel price index for 2022.
Christie & Co’s market insights also reveal there was a notable increase in closed assets being sold – about a third of all transactions compared to less than a fifth pre-Covid, albeit the vast majority of deals were for continued hotel use.
Carine Bonnejean, managing director of hotels at Christie & Co commented: “As we ended 2022, ‘heaven and hell’ was a good representation of where the UK hotel market was, with many hotel operators holding off on selling and buyers adopting a ‘wait and see’ approach in anticipation of a price correction and an increased volume of distressed assets coming to market this year.
“Yet we have kicked off the new year with a strong pipeline of new instructions and advisory work and we anticipate renewed activity over the coming months. The majority (60%) of respondents who took part in a sentiment survey that we conducted at the end of 2022 indicated plans to buy and/or sell in 2023, suggesting the market will remain buoyant, despite facing the confluence of headwinds that are expected to exert pressure owners and operators this year.”
