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Resurgent Regional Hotels Boost UK Leisure Sector

Sarah-Jane Lampe 7 April 2014

Britain’s hotels are expecting 2014 to surpass the successes of 2013, according to the latest Hotel Britain report from accountants and business advisers, BDO. The improvement is being driven by a notable resurgence in the fortunes of regional hotels, which has seen areas outside London catch up with the increased levels of growth experienced by hotels in the capital in recent years.

In the regions, average achieved room rate (AARR) growth for 2013 was 1.4%, while London’s AARR was marginally down in 2013 (-0.1% to £152.48) as the 2012 increase in rates during the Olympics weighed on performance. Rooms yield growth for 2013 in the regions was 3.5% compared to a 1.1% rise in London.

The resurgence in the regions is being driven by hoteliers reinvesting in the meeting and events packages they offer, as the economy and the market improves. In addition, returning consumer confidence is resulting in people taking advantage of mid-week leisure promotions and an increase in the number of weekend breaks being taken here in the UK instead of Europe.

The strong regional hotel performance has not gone unnoticed by investors, especially from the US, leading to an increase in interest and activity in mergers and acquisitions, stimulated by improving economic conditions encouraging banks to release long held hotel assets back onto the market. The market recovery and the portfolio transactions in early 2013 boosted market confidence to the point where the average transaction value in 2013 of £50m was up 55.9% from the previous year, and the total transaction value in 2013 was at its highest point since the recession hit in 2009, making the UK the most active market in Europe.

BDO partner, Robert Barnard said: “Regional hotels have had to learn some very tough lessons in recent years and the ones that have learnt well are emerging from the recession with more sophisticated marketing strategies. The move away from the traditional focus on MICE trade to attracting more mid-week and weekend leisure visitors is a good example of this and has meant hoteliers were able to take advantage of the UK’s hot summer of 2013 and present a compelling alternative to airfares and the expense of the Eurozone.”