Is this Spring just the right moment to buy a hotel in time for the holiday season, perhaps with a medium term plan? Hotel as well as bed and breakfast specialists at Colliers International think so, and the jump in viewings this year gives them strong evidence that others do too.
The firm has reported a confident start to 2013, with viewings soaring and headline grabbing sales across the UK.
The sector is looking good
Colliers International hotels director Simon Wells said: “The long winter and awful weather put the market on hold for a couple of weeks but the moment the snows melted the phones started ringing.
“Good value hotels being marketed at a sensible price are attracting a lot of attention. They represent an investment opportunity where there is an attractive return on capital and, combined with the increasing availability of finance at low interest rates, the sector is looking good in 2013.
“The weak pound is also stimulating interest in the UK hospitality sector as foreign tourists take advantage of their increased spending power, and investors look at the returns they can achieve compared with other investment vehicles.”
Significant increase in instructions: best since 2007
The Colliers Bristol office had a very good 2012, with sales exceeding target, and a significant increase in instructions in 2013 has led to a surge in inquiries from would-be operators keen to snap up a property:
“The bad weather in early January clearly put people off searching for a new property, but it must have whetted their appetite because we haven’t seen interest levels like this since 2007. We have seen particularly high levels of activity from existing operators keen to add to their portfolios, and from those who are in the industry but who may not have owned their own business before.
Decent value, real opportunity
“Hotels represent decent value now as the prices have come down significantly. It’s not that difficult to find a perfectly good hotel not being run as well as perhaps it could be, and therefore failing to deliver what it might.
“This is clearly an opportunity for the experienced operator to make a profit and increase value by making the existing turnover into an attractive profit, as well as adding business and pushing on to the next level.”
“It is important to remember that many businesses continue to thrive despite the prevailing chill wind. For those buyers who have the skills to reinvent and turn around a business, the current climate is a real opportunity.”
£400k or £2 million – there are good properties
“As well as a wide range of hotels and bed and breakfasts, there are also a good number of pubs on the market and, with owners prepared to go to market at the correct price, buyers can recognise the increased value in the market. It’s clear there are opportunities out there whether you are looking at spending £400,000 or £2 million.”
CASE STUDIES: quality properties, quality opportunities
- 1. The Ellerby Hotel
Location: Whitby, North Yorkshire
What you get: Characterful Grade II Listed country inn in superb National Park location
and tourist hotspot
Rooms: 10 letting bedrooms
Owner’s Accommodation: Two flats, one with double bedroom, lounge, small kitchen and shower room/wc; the other has a small bedroom, large lounge and bathroom/wc.
Who goes there: Tourist attractions Whitby, Saltburn-by-the-Sea, Staithes and Runswick Bay
Price: Reduced from £1.2m to offers around £850,000 freehold
Food for thought: Consistent £800,000 plus turnover net of VAT
- 2. Victoria Square Hotel
Location: Clifton, Bristol
What you get: Two handsome buildings facing a leafy square in the fashionable Clifton district of Bristol
Rooms: 41 letting bedrooms (nearly all B&B trade)
Who goes there: Great mix of business and leisure – Clifton Village and the famous Suspension Bridge; Harbourside with the SS Great Britain; wonderful architecture.
Price: £1.75 million – half 999 year lease and half with more than 40 years remaining
Food for thought: Run under management. Very straightforward mix of commercial and leisure with growing turnover of £700,000 net of VAT.
- 3. Best Western Burnett Arms Hotel
Location: Banchory between Aberdeen and Braemar
What you get: Three-star town centre hotel in Royal Deeside
Rooms: 18 bedrooms to sleep 32
Owners Accommodation: On the first floor there is a range of rooms used as staff rooms.
Who goes there: Tourist attractions include Royal Deeside; field sports – fishing; shooting; stalking; near to Balmoral; close to Aberdeen, the ‘oil capital’ of Scotland.
Price: Offers around £1,000,000
Food for thought: Long established hotel with turnover of £853,169 (net). The Burnett has been in the same family since 1965, and is still operated and managed by the family.
All enquiries should be directed to Simon Wells, Hotels Director, Colliers International on 0117 917 2000.
About Colliers International
Colliers International is the third-largest commercial real estate services company in the world, with over 12,300 professionals operating out of more than 522 offices in 62 countries. A subsidiary of FirstService Corporation, it focuses on accelerating success for its clients by seamlessly providing a full range of services to real estate users, owners and investors worldwide, including global corporate solutions, brokerage, property and asset management, hotel investment sales and consulting, valuation, consulting and appraisal services, mortgage banking and research.
In the UK, Colliers International is one of the top real estate advisory organisations, employing over 700 people in 12 full service offices across the UK and Ireland.