Continued strong RevPAR growth and major portfolio transactions.

In July 2024, the UK hotel market continued its strong performance with RevPAR levels significantly above those of 2019, driven by high occupancy rates and increased Average Daily Rates (ADR). Edinburgh and Belfast remained top performers, with Edinburgh maintaining high RevPAR due to strong demand and favourable market conditions. One of the major transactions in July was Blackstone’s acquisition of the Village Leisure portfolio for £850 million, highlighting the continued interest and investment in the UK hotel market, particularly in large portfolio deals.

 

Dealmaking is hitting highest levels in almost a decade …

Dealmaking in the UK hotel sector reached a record volume in H1 2024, totalling £3.08 billion—a 35% increase compared to the entire previous year.

Many see this as a turning point for hotel activity and investor confidence. US private equity firms, including Blackstone and Starwood Capital, have shown significant interest. Despite interest rate uncertainties, with deal volumes expected to exceed £5 billion this year.

Alternative accommodations, including short-term rentals, continue to grow rapidly in the travel market. Berlin-based digital hotel platform Numa has acquired UK-based Native Places short-stay business division; adding over 800 units to Numa’s property portfolio.

Hotels, along with residential properties and data centres, have stood out in the commercial real estate market, but pricing challenges persist due to inflated asset values and rising operational costs.

 

… as private equity funds and lenders begin to open their wallets once more …

Cheyne Capital recently provided a substantial £525 million senior loan to Fattal Hotels for refinancing four London hotels. Acquired by the group in 2019, the assets operate under the Leonardo Hotels brand.

The refinancing demonstrates confidence in the London hotel market’s recovery post-COVID-19. Key factors in this loan would include assumed strong operational capabilities by Fattal and supremely strategic tourist destinations.

Overall, this deal reflects optimism about the market’s future and underscores the importance of quality partnerships and locations.

 

.. and “strategic partnerships” become all the rage …

Accor and LVMH recently announced a partnership to open hotels in Rome and Venice under the iconic Orient Express brand.

Christian Louboutin, the luxury shoe designer, has acquired a stake in Experimental Group, a Paris-based hospitality company. Louboutin’s investment reflects a trend of fashion brands entering the hospitality sector.

The collaboration between S Hotels & Resorts and Ascott marks the first time that two leading Asian hospitality brands have formed a strategic alliance. It is a significant step forward in S Hotels & Resorts’ strategy to strengthen its portfolio in the UK, whilst also enabling Ascott’s expansion in Europe.

 

… with stadia also getting in on the act …

Radisson RED has been unveiled as Edgbaston Stadium’s hotel partner; expanding its portfolio including Twickenham Stadium. This project has a particular focus on flexibility of its space; with half of the hotel guest rooms overlooking the cricket ground

The Ascott Limited has also expanded its portfolio via a global partnership with Chelsea Football Club. As Official Global Hotels Partner of the English Premier League club, Ascott will also assume management of the 232-unit stadium hotels at Stamford Bridge under its “lyf” brand

 

… but don’t forget to future-proof your operations!

EV charging provision within the hotel industry is a critical part of maintaining competitive advantage.

While only six percent of hotels currently offer EV charging, smaller cities lead the way, demonstrating that this service is no longer a luxury but a necessity. Drax Electric Vehicles emphasises that hospitality businesses must invest in good EV charging facilities to keep pace with the rapidly growing EV market.

 

General Election Fall Out

Following July’s General Election result we, like many people in the UK and around the world, wonder what changes will come and the impact that this new government will have on all areas of our lives.

We have outlined below some of the new government’s key pledges and what they could mean for you.

 

HMRC activity in the Real Estate sector

HMRC has ramped up its efforts to tackle tax non-compliance in recent years, and the new government is expected to boost HMRC funding from its first Budget as part of its commitment to closing the tax gap.

‘Nudge’ letters are often used to target non-compliance risks, which are informed by HMRC’s large database of financial information and issued to taxpayers who may need to review and potentially correct their tax position.

Here we discuss the implications as to what this will have towards both individual and corporate landlords.