Is the financial stress beginning to ease for UK hotels?

By Luke Nicholls

- Last updated on GMT

Related tags: Hotel

The Colliers International Hotels Agency team sold 96 UK hotels in 2012
The Colliers International Hotels Agency team sold 96 UK hotels in 2012
Despite hoteliers battling the perfect storm of the on-going recession, high rates of VAT and costly planning delays – the industry will be buoyed by the fact that only 26 per cent of hotel sales last year were ‘distressed transactions’ emanating from administration or receivership.

According to the latest research from Colliers International Hotels, the vast majority of deals in 2012 actually involved new entrants to the market (34 per cent of deals) or expansions by existing hoteliers.

Julian Troup, head of Colliers International Hotels, said: “Despite these extremely challenging times, we’re encouraged by the increase in the number of new buyers who saw the opportunity to invest in the hotel market after taking a long-term view on an improvement in real estate and recognising the immediacy of trading gains under their ownership”. 

“Although there continues to be sellers that have to dispose of properties for financial or health reasons, this was surpassed by those who made the decision to sell for reasons such as retirement, or a change of occupation.”

Job creation

The hotel sector was also a major player in the UK economy last year; generating £115bn as the sixth largest employer in the country.

Forecasting the year ahead, Troup added: “2013 will be similar to 2012 in terms of the level of activity and prices achieved.  There are still buyers out there with cash or those supported by bank funding.

“We have also seen a marginal increase in private equity-backed interest, together with new-to-the-market buyers who see the opportunity to acquire and run a hotel underpinned by the comfort of alternative use in the event of the hotel venture not being to their liking.

“Both buyer and seller sentiment was similar to the previous year although the banks, who are major influencers in our market, showed signs of accelerating the sales process whilst their colleagues in credit although remaining cautious did take a more realistic view on lending particularly to proven operators and better quality businesses.”

Colliers’ high-profile deals from 2012:

  • Crowne Plaza Hotel, Shoreditch – 196 beds
  • Vermont Hotel, Newcastle – 101 beds
  • Royal Hotel, Scarborough – 110 beds

Other notable sales:

  • Swan at Streatley – 45 beds located on the Thames
  • Tophams, Belgravia – 50 beds
  • Alverton Manor, Truro – 37 beds

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