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Positive start to the year for the UK hotels market

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Even before hotels and hospitality businesses were able to reopen their doors on 17 May and welcome inside guests and customers, we had been observing increasing confidence in the UK transactional market.


The success of the UK vaccination programme has created a growing certainty that the worst of the pandemic is over, and has justified the calm approach adopted by the banks and landlords which has undoubtedly limited the number of distress sales. As hopes have risen that that the dark days of national lockdowns are over, so interest has increased in hotels and hospitality as assets, bringing to the market both buyers and sellers, among them a significant number of prospective purchasers with cash reserves or funding support from private equity.

So far this year we have witnessed an uplift in activity across the board. Formal viewings are the most accurate way of monitoring meaningful activity and we are pleased to confirm that we have seen a gradual increase, with viewing levels during the first quarter exceeding those of the same period of last year; even before the real onset of COVID.

There is a scarcity of stock on the market at present, largely we feel down to some owners thinking there will not be a great deal of activity; this is far from being the case. There is a real “window of opportunity” to dispose of their business interests whilst the prospect of distress – which may affect supply - remains on the horizon.

Hotel Trading Update
In our UK Hotel Market Update in 2020, we predicted that prime locations and quality hotel and associated hospitality opportunities would continue to attract serious interest from an increasing pool of buyers. The early months of this year have served to vividly illustrate the accuracy of this observation, with evidence of intense demand for prime hotel and inn opportunities in popular staycation regions such as the Lake District, Cotswolds, South East, parts of Scotland and other National Park destinations.

Earlier this month, the Hotels Agency team at Colliers completed the off-market sale of the Waterhead Hotel, Ambleside, acting for English Lakes Hotels Resorts & Venues, to The Inn Collection Group.  A 41-bedroom freehold boutique hotel, it underwent extensive modernisation in 2004 and at that time, it was described as being the first four-star town house hotel in the Lake District. This was the latest of several high profile hotel and hospitality business sales that Colliers has agreed in recent months, and was yet another example of our ability to undertake a transaction in a discreet and confidential fashion. 

A number of these quality assets are examples of hotels attracting pre-COVID selling prices, such as the sale of Dumbleton Hall. This 38-bedroom Grade II* listed building hotel, which is set in nearly 16 acres on the fringe of the Cotswolds, was purchased for an undisclosed sum off a £6 million guide price, following significant national and international interest which culminated in more than ten formal offers being submitted. It was sold to US based investors who remain attracted to the UK hotel market.

Whilst staycation opportunities are attracting the highest level of interest, we are also still experiencing demand for commercial/corporate hotels where a history of profitable trade is being considered by buyers who are prepared to disregard the unique trading position since March 2020.

Forecast

There are indications that a shift is taking place in what people are seeking from a holiday. The recently-published report from Colliers, entitled UK Staycations 2021: A Year of Opportunities  provides some interesting insights and predictions, including an observation about rising demand for UK luxury staycations featuring treats such as room upgrades, expensive menu choices, spa treatments and afternoon teas.

So what does this mean for the UK hotels sector? Hotels have proved to be a robust sector throughout the past, and the same will apply in the period ahead. It is my firm belief that there will always be people looking to buy hotels and associated businesses in the UK. It is a sector and lifestyle that is known to everybody, and at some point in their lives many will have thought about the prospect of running their own hotel business.

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About the Author

Julian Troup handles large private and corporate hotel transactions throughout the UK on behalf of his clients, with asking prices ranging from £1.2m to in excess of £20m. To get in touch, contact Julian.Troup@colliers.com.


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Julian Troup

Head of UK Hotels - Agency

Hotels Agency

London - West End

I originally trained with a long established firm of Chartered Surveyors based in Manchester and have been working in the licensed, leisure and hotel property market since 1987. I joined Colliers in 2007 to head up our UK Corporate hotel operation. I was appointed Head of UK Hotel Agency during 2011.  Since the beginning of 2003 I have sold or acquired over 100 provincial hotels on behalf of clients of asking prices ranging from £1.2m to in excess of £20m.  In addition to the managerial responsibilities, I remain focused on handling larger private and corporate hotel transactions throughout the UK.

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