So far this year I have agreed four hotel sales, and completion has taken place on the sale of an idyllic Cotswolds inn with rooms, which attracted a number of offers when it was discreetly made available off-market. Two further completions are expected shortly.
My colleagues around the country have seen similar levels of activity in recent weeks, including seven deals being agreed in Cumbria and the Lake District, and exchanges taking place on six hotel associated assets in London.
This busy start to the year wouldn’t usually be particularly remarkable. However, as we all know only too well, this year has so far been far from typical as a result of the pandemic and lockdown. This follows the challenges of 2020 in which our clients in the hotels and pubs sector had to contend with lockdowns, tiered regional restrictions, limits on licensing hours, sanitising requirements, and social distancing.
In this context, such a busy start to the year is impressive, and demonstrates the demand for hotels and inns, and the strength of the sector.
Amid the challenges of last year, hospitality operators were very clever and very innovative in making sure that they could satisfy customer demand, whilst keeping their customers safe. They thought very quickly on their feet to either repurpose their hotel offering or to cut their costs to make sure that they could continue to operate successfully. It was certainly easier for hoteliers in strong tourist areas than those in city and urban locations.
Although the market for hotel sales was not easy in 2020, the Hotels Agency team at Colliers still saw prospective purchasers vying with each other to secure hotels that they considered to be desirable. We handled 47 sales in the end – more than £80million in aggregate value.
This not only vividly demonstrates how hotels continue to be regarded as attractive property based assets, but also highlights the way in which buyers are looking beyond the present crisis.
I cover a diverse geographical area which encompasses the South West (including the Cotswolds, Devon, and Cornwall); Mid and South Wales; and all of the West Midlands, including Birmingham. In all of these areas I’ve been seeing buyers and prospective buyers who are very much looking to the long term, and I know this has also been the experience of colleagues around the UK.
For buyers such as these, the fact that they might be unable to open their newly-purchased hotels immediately to guests has not been a problem. In fact, it has provided them with an opportunity to carry out refurbishments so that when the time is right they are ready to reopen the hotel as a new product.
They are also aware that if the opportunity they are looking at doesn’t trade well as a hotel at the moment, the chances are that it could work very successfully for another use. In 2020, a number of the hotel sales that we agreed included options for alternative uses. Usually this involves conversion to residential, but we also had hotels go for conversion to retirement living, offices, and sheltered accommodation.
Staycations were huge last year, as people who had felt trapped in their homes and their immediate environment during lockdown headed out into the countryside and to the seaside when they had the opportunity, taking their children and other family members with them.
In terms of what has been selling since the outbreak of the pandemic, we’ve been seeing strongest demand in these main ‘staycation’ areas of the UK, particularly locations such as the Lake District, the Cotswolds, and coastal resorts in the South and South West. With travel remaining uncertain as a result of COVID-19, people will continue to want to get away, whether for a holiday or a weekend break, meaning that the market fundamentals are still in place for UK hotels particularly in these ‘coast and country’ high demand areas.
* This is an updated version of an article that originally appeared in the Winter 2020 issue of Spotlight, the magazine produced by the Bristol office of Colliers International.
About the Author
Peter Brunt is an experience chartered surveyor who has been dealing with the hotel and pub market for more than three decades. He is director in charge of operations for Colliers in the south and south west of England and the Cotswolds, Herefordshire, Worcestershire, all of the West Midlands including Birmingham, parts of Shropshire and south and mid Wales. To get in touch, please email email@example.com.