Britain’s hotels are expecting 2014 to surpass the successes of 2013, according to the latest Hotel Britain report from accountants and business advisers, BDO LLP. This continuing improvement is being driven by a notable resurgence in the fortunes of regional hotels, which has seen areas outside London catch up with the phenomenal levels of growth experienced by the capital in recent years.
AARR and yield growth outperform London
In the regions, average achieved room rate (AARR) growth for 2013 was 1.4%, while London’s AARR was marginally down in 2013 (-0.1% to £152.48) as the 2012 hike in rates during the Olympics weighed on performance. Rooms yield growth for 2013 in the regions was 3.5% compared to a 1.1% rise in London.
Reinvigorated MICE market
The regional resurgence has been driven in part by a reinvigorated meetings, incentives, conferences and exhibitions (MICE) market as the economy has improved. In addition, returning consumer confidence is resulting in people taking advantage of mid-week leisure promotions and an increase in the number of weekend breaks being taken here in the UK instead of Europe.
Investor interest and activity
The strong regional hotel performance has not gone unnoticed by investors, especially from the US, leading to an increase in interest and activity in mergers and acquisitions, stimulated by improving economic conditions encouraging banks to release long held hotel assets back onto the market.
The market recovery and the portfolio transactions in early 2013 boosted market confidence to the point where the average transaction value in 2013 of £50m was up 55.9% from the previous year, and the total transaction value in 2013 was at its highest point since the recession hit in 2009, making the UK the most active market in Europe.
Sophisticated marketing strategies
BDO Partner Robert Barnard said:
“Regional hotels have had to learn some very tough lessons in recent years and the ones that have learnt well are emerging from the recession with more sophisticated marketing strategies. The move away from the traditional focus on MICE trade to attracting more mid-week and weekend leisure visitors is a good example of this, and has meant hoteliers were able to take advantage of the UK’s hot summer of 2013 and present a compelling alternative to airfares and the expense of the Eurozone.”
About Hotel Britain
Hotel Britain is the definitive guide to the performance and prospects of the UK’s hotel industry. It is compiled from the responses of a representative cross section of 456 hotels comprising 77,607 rooms, and including 152 London hotels and 304 around the rest of the country. The results of this survey are grouped for convenience according to geographic location.