Research - JANUARY 11, 2018

U.K. hotel investment reaches £5b

by Andrea Zander

The U.K. hotel 2017 investment total reached £5 billion ($6.8 billion), increasing 35 percent year-on-year, according to Knight Frank.

Approximately £2.5 billion ($3.4 billion) of the capital came from foreign investors.

The success is built on strong fundamentals underpinning the sector, including a strong surge in portfolio activity and portfolio break-ups meaning larger single assets being available to the market and a strong hotel trading performance, both in London and the regions.

The weakened pound has continued to draw greater than anticipated tourist numbers and also invited more domestic staycation holidays, which has ensured that occupancy rates have grown, with the regions seeing record-high occupancy rates of 77 percent.

Knight Frank predicts that despite current economic uncertainty, the sustained and solid income generated from the hotel sector is likely to continue to drive further investor appetite over the next 12 months due to continued growth in RevPAR (revenue per available room) and GOPPAR (gross operating profit per available room) in 2018. This comes as investors seek long-term resilient asset classes, which provide strong economic fundamentals and income security.

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