20. December 2011 12:28
Photo credit: J Donohoe
Don’t look at European hotels for sale – just go straight to London.
That’s the advice you can see commercial property investors being given, in light of a new study from STR Global and Whitebridge Hospitality.
The research found that London hotels are outperforming the rest of the UK property market for profitability – and have been for the past 11 years.
The profit gap between hotels in the capital and other regions of Britain has been getting bigger since 2000, keeping up with inflation while the rest of the UK’s hotels have seen profit margins drop by 11.6 per cent.
Conditions may be tougher outside of London, suggests the report, but demand in London is certainly booming. “Occupancy levels at London hotels have risen from about 82 per cent in 2000 to nearly 85 per cent in 2010,” the report explains, while the average daily rate has seen another increase from £140 in 2000 to £145 last year. Compare that to regional hotels, where the ADR fell from £85 to a mere £70 respectively, and it’s clear that London’s property market remains resilient in the light of the ongoing Euro crisis – something no doubt helped by the influx of tourists and foreign investors, all of whom need somewhere to stay for the night when visiting the capital.
Ray Withers, Director of investment specialist Property Frontiers, comments:
"It is no secret that there is an air of uncertainty surrounding the capital but the overall trend for London has been positive, showing itself as a resilient hotel market while the rest of the UK has found it difficult to manage inflation causing performance losses. With this in mind, the hotel market in London this year has been forecasted at near double digit growth while 2012 is expected to be a record breaking year for the capital with over 5,000 new rooms opened or re-opened in response to growing demand for accommodation thanks to the 2012 Olympic Games and the Queen's Diamond Jubilee celebrations."