By +Eric Jafari
UK hotels are helping to drive the country's
economic recovery, with research showing business activity
has increased in the service sector as a whole in the three months
According to the Confederation of British Industry's (CBI)
quarterly Service Sector Survey, optimism levels are also on the
rise. Consumer services, including hotels, are leading the charge.
Business volumes are rising at the fastest pace since August 2007,
in spite of increasing employee costs.
However, there are concerns among firms about the shortage of
internal finance and the inability to access external funding.
Nevertheless, consumer services expect growth to be sustained, with
profits rising strongly. Stephen Gifford, CBI director of
"There appears to be a sense of growing confidence in the
service sector. We've seen some turnaround in activity this
quarter, and a more positive outlook for the next."
Despite this, caution is advised when entering the hotel market,
as conditions "remain tricky". Mr Gifford explained that Britons
are continuing to feel a squeeze on real incomes, meaning their
spending power is limited. What's more, business confidence is
"vulnerable to any adverse developments in the global economy".
Nonetheless, it cannot be denied that things are looking up for
UK hotels. During Q1 investment totaled £1.9 billion - nearly
quadrupling year-on-year. During the same period in 2012, just £492
million was transacted. There are currently over £1.2 billion
assets currently being marketed across the UK and Savills claims
that transactions will exceed annual levels recorded over the last
five years, even if just a small proportion of units are sold.
Although business and investment activity is increasing,
Michelle Web, director of hotel investments at Savills, isn't
convinced this environment is sustainable. "This has been an
exceptionally strong first quarter in the hotel investment market,
boosted by the sale of three significant portfolios, the Hotel du
Vin/Malmaison, Principal Hayley and Mariot which had all been on
the market for some time, as well as the recent sale of the
InterContinental London Park Lane."
30 May 2013
Hotel Investments,Hotel Performance