Development trends in the UK hotels sector
Knight Frank recently published their analysis of development trends in the UK hotels sector.
The central message is that despite lingering uncertainty caused by Brexit, increasing land values, build costs and competition from other development uses, there are still record levels of institutional investment and a strong development pipeline.
Some key takeaways are as follows:
- 15,500 new hotel rooms opened in 2018, constituting a 2.4% growth in the UK hotel supply. Around 19,300 new rooms are expected to open by the end of 2019, equating to annual supply growth of 2.9%.
- London has jumped ten places in Knight Frank’s hotel development index, moving up to second behind Edinburgh in the list of top 20 most attractive UK cities for hotel development.
- Confidence in the sector remains strong, driven by a resilient trading performance, a greater understanding of the fundamentals of the UK hotel sector and a scarcity of assets for sale.
- Around 35,000 rooms are currently under construction in the UK, expected to open by 2023. Hotel supply in London is forecast to rise by 4.2% in 2019 and by 4.5% in 2020.
- The budget sector is expected to rise by a further 7,500 rooms in 2019, representing annual growth of 5%. The four-star and three-star sectors are also expected to see strong growth.
Richard is s senior associate in our Construction team.