Bath has been identified as a ‘hot spot’ for hotel development in the UK.

The annual UK Hotels Market Index from Colliers International’s ranks Bath as second in the UK for hotel investment and development ‘Hot Spots’, behind Edinburgh and ahead of cities including Belfast, Cambridge, Bristol and Cardiff.

Bath moved up ten places in the index, which is now in its third year, as a result of strong Average Daily Rate (ADR) performance, which is now the highest in the UK after London. 

According to Ed Jefferson of the South West Hotels team at Colliers International, some local hoteliers have expressed concern about the number of new rooms coming to the market.

He explained: “The situation in Bath is more nuanced than it might first appear. It is not a large market and will be sensitive to any large scale new additions, so there’s a risk that the city could become a victim of its own success.”

Nevertheless, enticed by the city’s balanced and long term potential and a lower active development pipeline than many of its peers, Bath has been very successful in attracting both business and leisure demand and this looks set to continue, according to Colliers’ latest research.

The 177-bedroom Apex City of Bath hotel opened last year, and this year the 148-bedroom Z Hotel and the 121-bedroom Hotel Indigo will launch in the city. It has also been estimated that over 800 Air B&B rooms have become available in Bath. 

Earlier this year, Bath Tourism Plus announced they would reassess the impact of new hotel development in the city after a number of Bath hoteliers raised concerns with Bath and North East Somerset Council about exacerbation of existing over-supply issues by proposed development of a 206-bedroom hotel within the former Bath College Allen Building development.

Peter Brunt, a director in Colliers International’s Hotels Agency team, added: “Bath’s hotel industry has seen considerable expansion recently and it is extremely sought after by hoteliers.”

The UK Hotels Market Index from Colliers International is compiled from analysis of nine key performance indicators (KPIs) to score each of 34 locations with a figure from one to five (one being the lowest and five being the highest).

The determining indices include land site prices; build costs; market appetite; valuation exit yields; room occupancy; average daily rate; room occupancy rates; four-year RevPAR trend; active pipeline as a percentage of current supply; and, construction costs. The ratings are then consolidated into a single figure and ranked to show which markets are hot in terms of a desirable location for investors to acquire an existing hotel or develop a new one.

Bath features in the top five markets with the highest Average Daily Rate (ADR) outside London, going from £116 in 2016 to £122 in 2017. It is also in the top five markets for hotel performance relation to costs of development (Development/RevPAR Index), scoring 4.27 out of five compared to Belfast at 4.38; Edinburgh 4.31; Cardiff 4.08 and Glasgow 4.08.

Marc Finney, Head of Hotels & Resorts Consulting, Colliers International said: “The data in our third annual report reveals the ever-changing nature of the UK hotels market.

“Cities such as Bath and Belfast have really upped their game in the last year to make it into the top five, despite failing to feature in the top ten last year.

“Bath has been an under-supplied market for many years and this has enabled the city’s hoteliers to grow rates to levels that are amongst the highest in the country.

“Recent additions to the City’s supply have been comfortably absorbed with RevPAR (Revenue per available room) continuing to grow positively throughout 2017. National studies have shown that where a market is under-supplied with hotels this encourages growth in the largely un-regulated private letting sector – with Airbnb at the forefront of this.”

“Of course, this is a general market index and site specific factors will lead to significant variances.

Top 10 UK Hot Spots for Hotel Investment and Development:

Ranking

City

1

Edinburgh

2

Bath

3

Belfast

4

Cambridge

5

Bristol

6

Cardiff

7

Plymouth

8

London

9

Oxford

10

Glasgow


 

 Detail - Top 10 UK Hot Spots for Hotel Investment and Development:

UK Hotel Market Index 2018

Top 10

City

Colliers UK Index 2018

2017 Index

2017 Ranking

Change in position

1

Edinburgh

3.97

3.68

5.00

4

2

Bath

3.90

3.56

12.00

10

3

Belfast

3.78

3.44

19.00

16

4

Cambridge

3.68

3.66

6.00

2

5

Bristol

3.66

3.69

4.00

-1

6

Cardiff

3.63

3.60

11.00

5

7

Plymouth

3.60

3.50

16.00

9

8

London

3.59

3.56

12.00

4

9

Oxford

3.55

3.77

3.00

-6

10

Glasgow

3.47

3.35

23.00

13