Why Now is the Best Time to Invest in UK Hotels

investment property in the UK

The Rise of The ‘Staycation’

According to the travel marketing group, Sojern, UK staycations have soared amongst British travellers due to effects of the weaker pound and continued Brexit-related uncertainty.

Adam Ewart from Send My Bag explained that the popularity of taking vacations within the UK during the summer months has increased;

“I don’t believe it’s a great time necessarily for people to get the best value holiday that was so popular in Europe 10 years ago.” [1]

Staycations are, therefore, set for a Brexit boost as surveys suggest that almost half of Britons are less likely to holiday in Europe after the UK leaves the EU – this is great news for the hotel and leisure industry which stands to benefit greatly from the reduction in foreign travel as people take their holidays in the UK.

Sykes (holiday cottages) expect to see a 29% uplift in bookings to its 12,000-holiday homes across the UK this year.

CEO Graham Donoghue said:

“There is uncertainty amongst British holidaymakers who aren’t sure how far their spending money will stretch or what will happen with health cover, so we’re expecting many people to stay closer to home. Local tourism is already the lifeblood of many communities across the length and breadth of the UK, and a further boost in Brits choosing to holiday at home can only be good news for the businesses and economies in our holiday hot-spots.” [2]

Effects on the Sector

PwC forecast continued growth in the hotel and leisure sector for 2018, noting that both occupancy rates and revenue per room will increase in 2018. The report also notes that investment into the sector by individual and institutional investors will continue to grow;

“We forecast both overseas inbound and domestic investment into the hotel sector to continue into 2018, with the ongoing growth in investment appetite into the sector by the more institutional and mainstream real estate investors.” [3]

The hospitality industry employs 3.2 million people across the UK and contributes £130 billion to the economy – more than automotive, pharma and aeronautics combined.

It ranks as a top 7 employer in every region of the UK, ranking the third highest in some regions and accounts for up to 11% of the regional workforce – in short, the hotel and leisure industry is a huge and vital part of the UK economy and will continue to be so for the foreseeable future. [4]

Indeed, hotels in the UK recorded a year-over-year 7.2% increase in July and 9.2% increase in profit per room in August as profit levels at UK hotels soared over the summer. Non-room revenues (food & beverages, etc) also saw a healthy increase of 2.1%.

Hotel Room Investments Are Lucrative

Based on the economic and political indicators now is the best time to invest in UK hotels as revenues and bookings increase, the pound weakens and Brexit uncertainty results in less foreign travel.

The hotel room investment sector can offer returns that are significantly more attractive than traditional buy-to-let investments and come with the added bonus of being fully-managed, meaning investors simply collect their profits as the running and management of the hotel is handled by professional teams already in-situ.

Hotel Investment Snapshot

1. https://www.express.co.uk/travel/articles/939128/brexit-news-uk-staycation-soar-best-2018-holidays
2. http://www.travelweekly.co.uk/articles/313083/staycations-set-for-brexit-boost
3. https://www.hotelmanagement.net/own/warm-weather-boosts-profits-at-uk-hotels
4. https://www.incentivetravel.co.uk/news/agency-news/45793-coalition-of-sector-companies-call-on-chancellor-to-provide-targeted-support-for-hospitality-businesses