Optimism voiced on future of UK hotel sector

Two-thirds of hospitality leaders remain optimistic on the long-term future of UK hotel market, a new report reveals.

The majority also predict a rise in profitability over the next five years, according to Deloitte’s European hotel industry survey.

But half of respondents believe that a ‘no deal’ Brexit will lower the attractiveness of London for hotel investment. 

Cambridge (pictured) is rated as the most attractive UK city for hotel investment next year, ahead of Oxford and Edinburgh.

The survey, based on responses from 114 senior hospitality figures from across the world, pinpoints Amsterdam as the most attractive European city for hotel investment in 2021, followed by London and Paris. 

More than a quarter of respondents expect revenue per available room (revpar) growth to be greater than 9% in London in 2021, with 21% expecting the same level of growth for UK regions over the same period. 

However, more than half believe the UK investment cycle will take more than two years for performance to normalise in the wake of Covid-19.

Private equity is expected to be the largest source of capital for UK hotel acquisition in 2021, up 35 percentage points year-on-year.

Domestic and North American investors are expected to be the primary sources of investment.

Deloitte head of hospitality and leisure, Andreas Scriven, said: “The hotel industry has been one of the hardest hit by the outbreak of Covid-19.

“However, as vaccination developments look increasingly promising and consumers think ahead to 2021 travels, senior hospitality figures are more optimistic about the year ahead.

“Indeed, many expect profitability to rise between now and 2025. 

“The restrictions on international travel this summer saw many UK consumers switch their holiday plans to domestic staycations.

“UK destinations also remain attractive for hotel investment, with Cambridge overtaking Edinburgh to the top spot this year, the latter moving to third place behind Oxford.”

The firm’s head of UK hospitality advisory, Nikola Reid, added: “Across Europe, hotel investors continue to look for opportunities in Amsterdam which retains its place as the most attractive European city for investment for the fifth year in a row. 

“Second to Amsterdam is London but, as the Brexit transition deadline approaches, investors indicate some caution.

“For half of this year’s respondents, a ‘no deal’ Brexit scenario would lower London’s attractiveness for hotel investment.

“Combined with the challenges that Covid-19 has presented this year, boosting consumer confidence to once again pack their suitcase will be key to a speedy recovery of the hotel industry, and ensure long-term projected investment is realised.”

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