The Courier & Advertiser (Fife Edition)
New hotel investment jumps to £3.9 billion
UK regions benefiting as well as hotspots like London
The hotel sector hasn’t had its challenges to seek over the last couple of years but while London will always remain the most attractive centre for investment, there are grounds for optimism throughout the rest of the UK.
Brexit-related economic uncertainty has been a cause for concern, but developers and investors have demonstrated a high degree of resilience and ambition, particularly in regional activity.
Regional hotel openings last year included developments such as the Lympstone Manor in Devon, Crown Plaza in Manchester and Harbour Hotel in Belfast.
This year will see openings of Motel One and Moxy in Glasgow and the Principal Liverpool.
According to the latest report from GVA, investment transactions in the hotel industry exceeded £3.9 billion last year, up 25% on 2016.
With overseas visitors and staycations on the increase, there was a rise in occupancy in the regions and London.
The devaluation of sterling has played a part in driving staycations and, to a degree, the increase of overseas visitors to the UK.
VisitBritain indicates there were around 40 million overseas visits to the UK in 2017 – up 6% on the previous year.
A rise in returns and investment values has resulted in a greater spread of interest beyond London and into the regions, but the sector still faces headwinds as we progress through 2018.
Issues include the rising popularity of alternatives such as Airbnb, especially with its move towards higher-end rentals, as well as broader economic drivers.
The combination of low unemployment and potential changes in immigration policy post-Brexit will feed into a lower labour supply, but investors will also be conscious of rising food, labour and utility costs as well as the potential for market saturation.
Dundee has certainly benefited from the impetus provided by the wider £1bn waterfront redevelopment, with the expanded Premier Inn opening at the end of 2017, and a few years earlier the opening of the Malmaison (formerly the Tay Hotel).
This summer, we’ll also see the opening of the new Sleeperz hotel in Dundee.
It’s not only Dundee that could benefit from further hotel development and investment, with recently-announced expansion plans for Eden Mill distillery in Fife.
Eden Mill is already a top tourist destination, and the development will enable it to double the number of tourists from 25,000 to 50,000.
While the local hotel market has been broadly flat in recent years, activity is building. With the anticipated influx of domestic and overseas visitors to the new V&A, as well as other attractions in and around Dundee, the future is definitely looking bright.