Demand for rooms is a critical determining factor in the profitability of hotel investment in the UK, with strong demand fuelling healthy and consistent returns for investors.
As we look ahead to potential trends in 2019, there are encouraging signs in the meetings and events sector, which bode well for properties that rely on the business travel market.
Recent trends in meetings and events
The UK’s meetings and events sector has been through some tumultuous times since the global financial crisis and recession.
In a report covering the latest trends and prospects in the hotel market, PwC noted that demand for meetings and conferences was severely impacted by the economic downturn and the sector has been working hard in recent years to recover revenues.
Encouragingly, 2018 brought some positive results. The Meetings Industry Association (MIA) revealed that the UK meetings sector experienced a strong start to the year, with enquiry levels and the number of events from January to May higher than in the same period in 2017.
The average number of meetings held over the first five months of the year was up by ten per cent on 2017 and by 25 per cent compared to 2016. Typical daily delegate rates (DDR) have also grown consistently by ten per cent over the last three years, reaching £43.50.
Looking ahead with optimism
Looking to the future, the MIA has suggested there are some clear reasons for confidence in the meetings sector in 2019, which will encourage those investing in the hotel market.
In October 2018, the industry association said it was “looking towards 2019 with optimism” on the back of a successful summer and a rise in enquiries for the year ahead.
Data showed that last year’s summer period (June to August) brought a 49 per cent increase in meetings compared to the same months a year earlier.
Furthermore, there was a year-on-year increase of approximately seven per cent in average enquiry levels in the summer, which the MIA said gave an indication of “further sustained growth into 2019”.
Overall, the meetings industry has shown impressive performance, particularly in the context of the ongoing uncertainty around Brexit, according to Jane Longhurst, chief executive of the trade body.
She added: “It is great to report that the feel-good factor many of us experienced during the summer months extended to the industry as we saw both the number of meetings and DDR rate rise during the period.
“It is also encouraging to hear that most participating members are enjoying strong demand and are continuing to receive enquiries for 2019, particularly as forecasts for the UK economy are very cautious.”
The UK hotel market is currently offering a range of attractive prospects and opportunities for investors, including the Epic Hotel and Residence in Liverpool, where buyers can get ten per cent net rental returns assured for ten years.
If you are interested in investing in the UK’s hotel room market, watch this video and find out how Experience Invest can help you with your next property investment.