A buoyant picture of the UK hotel sector, boosted by the improving economic backdrop, is painted by new PricewaterhouseCoopers analysis.
Recent hefty rate growth in London has come on the back of high occupancy levels, with an annual average of 83% meaning the capital is effectively full up.
The regions have seen a “remarkable recovery” with continuously strong demand growth this year, despite some variable performances around the country.
However, conference and meeting market remains below past peaks and there is likely to remain a challenging environment for hoteliers to operate in, with consumer spending expected to remain squeezed until 2015.
New supply remains relatively high especially in London and improved trading will encourage more development and competition in the sector.
PwC head of hospitality and leisure research Liz Hall said: “The economy has put the fizz back into the UK hotel sector with a return to confidence and stronger demand. Continued economic recovery should mean sustained and enhanced prospects for hoteliers in 2014.”
Looking ahead, Samantha Ward, hotel deals leader at PwC, said: ”As the UK regional hotel performance begins to show signs of turning the corner to recovery, 2013 has seen a significant growth in hotel transaction volumes with both large portfolio and single asset deals.
“In addition to some legacy deals from prior year sales processes, the momentum seems set to continue as the banks are showing a much greater willingness to deleverage from hotel assets, either through the sale of the business or the loans directly, and more recently portfolios of hotel loans.
“Improved investor confidence off the back of forecast growth in UK hotel performance, a substantial pool of private equity capital and better availability of debt financing have all helped to boost deal flow.
“The current level of UK hotel transaction activity seems set to stay for 2014, with a significant pipeline of deals for the new year.”