Julian Troup, head of UK hotels agency at Colliers International discusses the state of the hotel market and how he is expecting properties with a strong leisure focus to be highly sought-after post Covid-19.
How much is transactional activity down year on year?
We had a solid and ahead of budget Q1 in terms of sales volumes which was looking to continue into Q2.
Since hotels were shut, understandably the volume of transactional activity has fallen back and some transactions have been put on hold whilst buyers await the re-opening of businesses.
Are you still selling properties?
We are still selling hotels and hospitality businesses. For example, we have recently sold the Radnorshire Arms in Knighton and Boscundle Manor in Saint Austell.
We are also still agreeing deals, but most have a completion date that ties in with the re-opening and subsequent return towards normality.
Are you attracting interest for buying properties?
Yes, there are a variety of different types of buyers still enquiring. There are still buyers out there with plenty of cash and we’ve also seen an uplift in the number of opportunistic buyers.
In addition, buyers are asking to look with a view to reviewing information and arranging viewings once lock down restrictions are eased.
We have been openly marketing the sale of Dumbleton Hall and having invited indicative bids, we are delighted to confirm that we have had around 10 formal proposals.
Are there still owners looking to sell?
We have a register of over 200 hotels and hospitality businesses available at any one time.
As well as these we are also still receiving instructions to place properties on the market and use this time to prepare for push the marketing in the not too distant future.
What’s your advice to these people right now?
It is “when” we return to pre-Covid-19 levels – not “if”.
Hoteliers need to plan and be properly prepared for when the lock down is removed – including marketing campaigns, staffing levels as things start to get busier and re-stocking.
What’s your advice to hoteliers looking to expand after lockdown lifts?
Make sure that you are properly prepared. Having cash or in principle funding in place will be key. Sellers will want to have the comfort of you being able to buy before they proceed, in the knowledge that any due diligence process comes with cost.
When do you expect business to pick up again?
At present the uncertainty about re-opening is getting many to sit on their hands. I think as soon as there are signs of re-opening/return towards normality then is the time that the confidence levels will change and trading and transactional activity will start to return.
Are there any early indications of which areas will bounce back quicker? In terms of transactions?
UK domestic demand is likely to aid recovery post lockdown. Taking a holiday abroad will be difficult for many because of the introduction by the Government of a 14-day quarantine period for travellers entering the UK from abroad, with some exceptions.
Given this context, there is a strong feeling that UK leisure-based trade “Coast and Country” (Staycation) will see a spike. Bearing this in mind it is likely that buyers and their funders will be first to look towards these types of businesses (and markets where leisure is traditionally strong).
However there will still certainly be demand for hotels mainly reliant on corporate business.
A lot will depend on the quality of the business and the circumstances behind the reason for sale
Which areas geographically remain the most robust to economic headwinds?
Those areas that are going to attract the strongest level of trade including national parks, strong coastal areas and cities and towns that have a mix of corporate and leisure segmentation