Colliers International’s Hotels team has launched its inaugural UK Hotels Market Index, an analysis of 36 locations across the UK, ranked to determine the ‘hot spots’ for hotel development and acquisition across the country.

Manchester comes second in the overall list of UK Cities behind only Cardiff, mainly due to its good investment and valuation parameters as well as its strong hotel performance, which is exacerbated by a relatively small number of recent hotel openings. 

Manchester also ranked highly in terms of rooms per population, reporting 37.5 rooms per 1,000 population, this is down to its reputation as a city popular for both business and leisure trade say the report’s authors.

The report uses nine Key Performance Indicators (KPIs), including; land value, room occupancy rates and construction costs to give each of the 36 locations a score from one to five (one being the lowest and five being the highest). These scores are then consolidated into a single figure and ranked to show which markets are hot and which are not in terms of a desirable location for investors to acquire an existing hotel or develop a new one. 

Marc Finney, Head of Hotels & Resorts Consulting, Colliers International said: “High land prices in London are causing investors to look outside of the Capital for opportunities to spend their cash. As such, we are increasingly being asked by our hotel investor and operator clients which UK regional cities offer the best development opportunities. Together with our regional experts, who know the local UK markets exceptionally well, our Hotel Market Index gives us something more than anecdotal evidence through which to advise our clients. With the Index we are able to couple our on the ground expertise with a more scientific formula to demonstrate the key performance indicators which should be influencing an investor’s decision making process and rank the opportunities according to their own investment criteria.” 

The 36 locations analysed for this report total a current supply of 286,966 hotel rooms. London accounts for the majority of these rooms taking a 47 per cent share, whilst Manchester and Edinburgh are next in line with five per cent of the market share a piece.
Meanwhile, Belfast, Glasgow and Manchester come out on top for occupancy levels in 2015, each reporting levels above 80 per cent, due to consistently strong week and weekend hotel demand.
Marc Finney continues: “London is by far the largest market with almost as much supply as all of the other markets combined and has recently been a star in terms of revenue per available room. However, given that our index punishes high land costs, high construction costs, sluggish growth in 2015 and a strong active pipeline, London only ranks seventh in our index.” 

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