Hotel sector booms in Inverness
“There is strong interest in the sector asawholeandin Inverness in particular”
KERR YOUNG
JLL
In May, Inverness emerged as the somewhat surprise leader in Colliers International’s Scottish Hotel Index.
It was a combination of strong levels of demand, rising average daily rates, a low active pipeline, relatively low development costs and high occupancy levels which allowed it to beat Edinburgh into second place.
The index found that Inverness is the most attractive market for investors, followed by Edinburgh and then Glasgow, Perth and Dundee and Aberdeen.
So it is perhaps no wonder that the hotel market in Inverness is active, with investors looking for hotel sites and for buildings which could be repurposed as hotels.
Sandy Rennie, of Shepherd Chartered Surveyors, explains: “Since Brexit we have seen a really positive surge in terms of tourist numbers because of the exchange rate and there has been an extension of the tourist season.
“It has put a lot of pressure on the hospitality sector with bed and breakfasts, hotels and serviced apartments struggling to cope with the demand.
This week, acting on behalf of Threadneedle Pensions, Shepherd sold a substantial office building in the heart of Inverness city centre to hotel development company Patio Hotels (Aberdeen) for an undisclosed sum.
The purchaser, which also operates Kingmills Hotel in Inverness, intends to redevelop the 23,000sq ft building, formerly known as Bridge House, into a four-star hotel.
Rennie says: “The Kingsmills Hotel is recognised as the number one venue in Inverness, but it is high end.
“It sits at about 97 per cent occupancy throughout the year.
“In converting Bridge House to a hotel, the idea is to position it at a slightly different level of the market.”
The four-storey and basement end-terrace building is on the west side of Church Street on a prominent corner position with Bank Lane in the city centre.
It has views of the River Ness and is a short walking distance from all city amenities.
Rennie says: “This sale represents a large disposal in the Inverness market and confirms the city’s reputation as a desirable location for hotel operators.”
Refurbishment to transform what some might call a rather unlovely office building is likely to include a major fit out and recladding.
Rennie says that the sale of Bridge House is just the latest in hotel oriented work going on in the city: “Last month a former swimming pool site which overlooks the River Ness was sold as a hotel site and Maple Court which is an old hotel has also been bought by Patio Hotels to be refurbished and extended.”
Kerr Young of JLL says: “There is strong interest in the sector as a whole and in Inverness in particular.
“But, with the exception of Aberdeen, there is a positive news story in the hotel industry in Scotland. Inverness has had significantly restricted supply in recent years and is a strong market with local corporates and good leisure.
“As its airport increases its passenger numbers it will increase the demand for beds.”
He says that in recent years the focus in the hotel industry has been on other markets and so Inverness hasn’t experienced a lot of new supply coming into the market.
Young says: “It is telling that the new development is being undertaken by a hotelier who knows the market well and already operates the best asset in the city.”