Despite headlines over the last 12 months being dominated by portents of economic doom over a potential hard Brexit and subdued growth for a number of other commercial sectors, the hotel sector in Wales is bucking this trend and has enjoyed an excellent 2017.
GVA has just launched its inaugural Hotels Economic and Property Market Review, providing an analysis of the hotel performance, supply and investment trends across the key UK markets that determined performance in 2017, and offering an outlook for the year ahead.
GVA’s report highlights that in 2017, investment transactions in the hotel industry across the UK exceeded £4billion, while the number of overseas visitors and the popularity of domestic ‘staycations’ resulted in rising visitor numbers. Wales has benefitted considerably from this with other research from Barclays* suggesting 29% of overseas tourists visiting the UK intend to visit Wales and 20% of UK residents who are intending to take ‘staycations’ intend to do so in the Principality.
These increased visitor numbers are reflected in the excellent performance of Cardiff hotels in 2017 with increases in occupancy, ADR (average daily rate) and RevPAR (revenue per available room) when compared with the previous year. The Welsh market and Cardiff in particular has displayed a positive growth story, with a number of new openings over the last 12 months, such as the high-profile Signature Living conversion of the Grade I listed Coal Exchange building to create a 200-bed hotel and wedding venue; and boutique operator Indigo opening a 122-bed hotel with a roof top Marco Pierre White restaurant, the first in Wales.
The UK hotel market continued to be popular amongst investors in 2017 with information from Property Data showing investment transactions in the hotel industry exceeding £4.8 billion, an increase of 53% on 2016. Investor appetite has been present in Wales with M&G Real Estate purchasing the 216-bed Clayton Hotel in Cardiff for £22.1 million in a sale and lease back deal with Ireland’s largest hotel operator Dalata.
John Coggins at GVA said “The UK Hotel market is in good health despite wider economic and political uncertainty. The local market in Wales remains strong with rising returns and investment values encouraging prospective purchasers, operators and investors to consider opportunities in Wales.
“The increasing appetite for quality assets is encouraging and the market is likely to remain consistent in 2018”.