Colliers International says hospitality sector in the South West remains resilient
A cocktail of factors has contributed to a bumper year for the hotels market in the UK and the South West of England in particular, according to the latest finding from global real estate advisor Colliers International.
Ed Jefferson, from the Hotels division at Colliers International, said: “Weak sterling, uncertainty surrounding Brexit, security concerns, a trend for short breaks and travel fatigue all contributed to increased demand for UK-based holidays, in 2018.
“The increase coupled with the best summer since 1976 means operators have seen excellent levels of occupancy and rising room rates. This boost to revenue was much needed amidst some challenging trading conditions.
“Staffing continues to be an issue, with increased wage costs and a shortage of casual labour due to rising housing prices, associated with the second homes market driving some locals away.”
“While some local councils have made attempts to legislate against this more will need to be done to solve the problem. Rising food costs, utilities and business rates continue to put pressure on margins for many.
“Despite these pressing factors, the sector has remained resilient. The strength of the market was best demonstrated through the marketing by Colliers International of the Richardsons Hotels portfolio in the early part of the year,” explained Jefferson.
“This was a portfolio of four large hotels in landmark locations throughout the South West. Huge publicity was achieved by the marketing campaign and more than 90 verified parties formally declared an interest.
“Significantly, a large proportion of these potential buyers were overseas investors that had previously not considered the UK regions.”
The sale of two of the hotels was successfully concluded, rescuing the group from administration.
The Harbour Hotels group secured the 58-bedroom Metropole Hotel in Padstow, North Cornwall and the 37-bedroom Fowey Hotel at Fowey, in South Cornwall.
“Both properties offer unrivalled locations at the heart of highly desirable seaside towns and will be hugely complimentary to the rest of the Harbour Hotel portfolio. They offer significant development potential, subject to the necessary consents, and it will be exciting to see them evolve over the coming years. Both properties exceeded their guides of £10 million and £5 million respectively.
“The sale was widely lauded as a fantastic result and a significant vote of confidence for the region.
“There is no disputing these are prime assets that attracted the interest of some of the world’s best hoteliers - as one interested party put it: ‘they simply aren’t making any more of them’.”
Ed Jefferson concluded: “These transactions, and the strength of interest received throughout the marketing campaigns, confirms the overall health of the South West hotels market, with plenty of ready, able and willing purchasers across both the private and corporate markets, all eager to capitalize upon the recent upturn in trading performance.”