UK provides most attractive investment opportunities for hotel industry, says survey

The UK beat Spain and Germany to be voted the most attractive place in Europe for investment opportunities in the hotel industry on Tuesday night, when over 160 industry professionals came together at Berwin Leighton Paisner’s (BLP) annual Hotels Conference.

Hosted at BLP’s offices in the City of London, 44% of voters perceived the UK as having the most attractive investment opportunities for the year ahead, followed by Spain at 25% and Germany at 12%.

Current affairs were also clearly on the minds of the attendees as equal numbers of voters (28%) felt that weaker economic news and geo-political threats posed the greatest risk to investment in hotels in the UK over the next year. 17% thought that it would be a potential change of government that would be key.

Interestingly only 5% of voters believed that the single biggest boost to hotel development activity in the UK over the next year would be the UK Government, perhaps reflecting the general industry view that Westminster gives insufficient support to the hotel sector.

The conference also hosted an expert panel who shared their views on current issues for the hotel sector, which included representatives from Patron Capital Partners, Realstar Group, Christie & Co, Starwood Hotels and Resorts Worldwide Inc, BDL Hotels and InterContinental Hotels Group.

BLP Real Estate Partner, Karen Friebe, commented: “Whilst our conference delegates clearly expressed short-term confidence in in the UK hotel market, there is a growing concern that the hotel sector, which is after all particularly susceptible to world events and geo-political threats, may be about to face one of its most challenging periods in many years, with so much economic and political turmoil manifesting itself in so many parts of the world.”

When asked why the last 12 months had seen so much hotel transactional activity,  45% of voters felt that this was down to investors having a more bullish view of future performance, with 22% attributing it to better news for the general economy and 20% to greater availability of debt for buyers.

70% of voters said that hotel brands will focus on franchising as the means of achieving their pipeline growth strategies over the next year, while only 9% of voters felt that there would be a focus on management agreements as a means of achieving growth.

BLP Real Estate Partner, Nick Skea-Strachan, said: “From the audience votes and the comments of our panellists it is clear that franchising is the route by which the major brands are growing their pipelines. This certainly matches our current experiences at BLP where we are seeing the higher volume of franchising deals result in a wider selection of operating and branding models and driving innovation in the sector.”


Other results

•           55% believed that the single biggest boost to hotel development activity in the UK would be greater availability of debt. 25% voted for better news for the general economy.

•           54% of voters felt that most of the equity for hotel deals in Europe would come from private equity sources over the next year, with 36% saying that real estate funds would provide this.


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