UK hotel investment hotspot
Investors looking for a good entry point into the UK property market will find few destinations more attractive than Liverpool, a unique city with key benefits including a growing student population and a strong, expanding economy.
One of the most appealing aspects of this destination at the moment, as far as property investment is concerned, is its hotel market, which has been ranked among the strongest in the UK.
In this article, Experience Invest highlights why Liverpool has emerged as a leading UK hotel investment hotspot.
A fast-growing market
The recent growth and current potential of the Liverpool hotel market was highlighted in the UK Hotels Market Index 2019 from Colliers International, a global real estate services firm. The report analyses hotel sectors in 34 cities across the UK using a range of criteria, including:
- Market appetite
- Room occupancy
- Average daily rate (ADR)
- Revenue per available room (RevPAR)
- Active pipeline as a percentage of current supply
Naming the best UK hotel investment hotspots, Liverpool was ranked third overall, behind only Edinburgh and Belfast, largely thanks to strong growth in both occupancy and ADR, which resulted in the highest four-year RevPAR trend. The city has also benefited from improved market appetite and relatively low land price.
Regional hotspot for investment
One of the most interesting and encouraging trends was Liverpool’s rise up the rankings between 2018 and 2019. The city was ranked 11th last year and climbed eight places in the latest report, the biggest improvement of any location in the top ten except Chester, which rose 11 spots from 15th to fourth.
Specific metrics showed Liverpool was among the top five markets for room occupancy in 2018, with an average rate of 81.8 per cent, an improvement of more than three per cent from the previous year.
The city was top overall for growth in RevPAR – which is calculated by multiplying a hotel’s average room rate by occupancy – between 2015 and 2018. Liverpool’s RevPAR of 7.3 per cent was significantly ahead of figures recorded in Edinburgh (6.1 per cent) and Belfast (six per cent).
Discussing the findings, Marc Finney, head of hotels and resorts consulting at Colliers International, said: “This year’s index shows a strong performance for the north-west of England, with Liverpool’s active pipeline ranking improving by eight spots, bringing it into third place.
“This is mainly due to strong growth in both occupancy and average daily room rate.”
The appeal of Liverpool
There are many factors currently working in favour of the Liverpool hotel market, which emphasise why it’s such an attractive proposition for property investors.
Firstly, this famous city is one of the UK’s leading tourist destinations. In the Conde Nast Reader’s Travel Awards 2018, Liverpool was named one of the ten best cities in the UK to visit, while Trip Savvy also ranks it as one of the top UK cities for international travellers.
As well as its unique culture and a proud history that encompasses everything from the Beatles to the Titanic, Liverpool is home to an ever-growing selection of restaurants, bars and nightlife venues.
These features mean the city will continue to hold a strong appeal for tourists, so investors in the local hotel market can expect strong demand for rooms and consistent yields on their assets.
But it’s not just leisure travellers who are helping to drive growth in the Liverpool hotel sector. The city’s expanding economy and thriving business community are fuelling the corporate travel market, which is a vital source of demand for rooms.
Strong economic growth
Data from the Office for National Statistics showed that Liverpool’s regional economy grew by 3.3 per cent in 2017, significantly ahead of the English average of two per cent. Along with Cheshire and Warrington, the city region was the fastest-growing local enterprise partnership (LEP) area in the country.
Liverpool city region LEP chair Asif Hamid MBE said: “These figures underline the progress being made to deliver sustainable economic growth in Liverpool city region. By supporting our strengths in sectors like manufacturing, health, and digital and creative we are enabling real, meaningful change in the city region.”
The range of accommodation options on offer to people visiting Liverpool is expanding all the time, with the Colliers International report showing a pipeline of 878 rooms set to enter the market over the next two years.
One of the most exciting additions of all is the Epic Hotel and Residence, the first luxury hotel in the popular Baltic Triangle. This property is currently offering ten per cent net annual returns assured for ten years, as well as the benefits of full management by a specialist company.
The UK picture
The UK hotel market has enjoyed a period of strong growth and prosperity in recent years, both in London and the regions.
According to PwC’s UK Hotels Forecast 2019, provincial hotels have experienced regular monthly ADR growth since April 2013, and a further increase of 1.2 per cent is predicted for 2019.
Britain’s impending exit from the European Union has created a degree of uncertainty, but it has also had some positive effects for the hotel industry. The result of the EU membership referendum back in June 2016 led to a steady downturn in the value of the pound, fuelling demand for international leisure travel to the UK.
The PwC report identified Liverpool as one city that is benefiting from a healthy pipeline of new rooms at the moment, along with the likes of Manchester, Belfast and Edinburgh.
For investors seeking out opportunities in this profitable sector, it’s clear that Liverpool is a leading UK hotel investment hotspot, not only in terms of choice, but potential returns and long-term growth as well.
UK Hotel Room Investment Guide
If you are looking to secure rental yields from the UK’s hotel investment market in 2019, click here to access a new market report which highlights the latest research.