Edinburgh remains at the top of Colliers International's latest UK Hotels Market Index, with a strong active pipeline and performance, largely due to consistently strong occupancy and average daily room rate (ADR) levels in 2018, a robust four-year upward revenue per available room (RevPAR) trend and continued strong market appetite.

The UK Hotels Market Index is an analysis of 34 locations across the UK, ranked to determine the 'hot spots' for hotel development and acquisition across the country. Belfast ranks second, moving up one place, predominantly as a result of continued strong performance and low building costs. This has fallen away a little in 2018 due to a large increase in supply but a great deal of the new pipeline is now open so we would see this stabilising again over the coming years. The active pipeline is now only 6.5% of the current supply, compared to a significant 33.9% in the previous year.

Liverpool is positioned third, improving its ranking by eight spots. This is mainly due to strong growth in both occupancy and ADR, resulting in the highest four-year RevPAR trend, combined with improved market appetite and relatively low land site prices.

Remarkably, Plymouth and Oxford have fallen out of the top 10. Oxford, despite recording strong RevPAR levels in 2018, has increasing land costs which affect its ranking. Plymouth, on the other hand, experienced a decline in RevPAR in 2018, which has largely been attributed to strong growth in Airbnb and alternative accommodation sectors as a result of a shortage of hotels.

Marc Finney, Head of Hotels & Resorts Consulting at Colliers International commented: "Overall the UK hotel sector is in rude health. Operating performance is holding up well in most UK markets and London continues to perform well. The UK hotel market adds about 10,000 new rooms each year and this has increased in pace recently with almost 18,000 new rooms expected to open in 2019. This leaves hotels as a rare bright spot in a property market which is facing challenges in other sectors."

Given that our index punishes high land costs, high construction costs, sluggish hotel growth in recent years and a strong active pipeline, some markets will rank lower than expected. Furthermore, the UK Hotels Market Index is a general market index and site-specific factors will lead to significant variances.

Key highlights:

  • RevPAR index ranks the best markets with regards to hotel performance in relation to the costs of development, it is a combination of the land cost, build cost, occupancy and ADR. Edinburgh was scored the highest with Glasgow and Liverpool as second and third.
  • London remains the UK's top performing market in terms of RevPAR, and has moved up a further two places, mainly due to the capital city's continuous growth in both occupancy and RevPAR.
  • Plymouth and Oxford have fallen out of the top 10. Despite recording strong RevPAR levels in 2018 has increasing land costs.
  • Chester has climbed back into the top 10 due to its growth in the city's occupancy levels, and is the no 1 rising star of 2018.

Top Ten UK Hot Spots for Hotel Investment and Development:

  1. Edinburgh
  2. Belfast
  3. Liverpool
  4. Chester
  5. Bath
  6. London
  7. Glasgow
  8. Brighton
  9. Cambridge
  10. Leeds

About Colliers
Colliers International Group Inc. (NASDAQ: CIGI) (TSX: CIG) is an industry leading global real estate services company with more than 15,000 skilled professionals operating in 68 countries. With an enterprising culture and significant employee ownership, Colliers professionals provide a full range of services to real estate occupiers, owners and investors worldwide. Services include strategic advice and execution for property sales, leasing and finance; global corporate solutions; property, facility and project management; workplace solutions; appraisal, valuation and tax consulting; customized research; and thought leadership consulting.

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