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hotel real estate
London hotels are some of the most lucrative in the UK, however new figures suggest that people are increasingly being put off by the price. Research by business advisory and accountancy firm BDO found that hotels in London had a solid month in May but the recent trend for success to lag behind other regions has continued.Hotels in the capital city – which have long been a target for commercial property investors – saw a 0.9 per cent reduction in room rates year-on-year to GBP 137.27. This is down from GBP 137.45 in 2012. However, at the same time occupancy rates increased from 83.6 per cent to 85.2 per cent, a rise of almost two per cent. This resulted in increased room yields of GBP 116.12, one per cent higher than the GBP 114.99 collected last year.Away from the capital, a 1.7 per cent drop in room rate to GBP 60.32, compared with GBP 61.38 in May 2012, was balanced by a 4.1 per cent rise in occupancy to 75.7 per cent from 72.7 per cent. This caused an increase in rates of 2.3 per cent to GBP 45.67.Robert Barnard, partner at BDO, said: “It is encouraging to see operators across the country posting year-on-year growth in rooms yield. Hotels in London, in particular, will be relieved that they are back in the black after several difficult months.“The market remains challenging but the sector is, as always, putting up a strong fight. Hotels are being canny and using a wide range of tactics, including selective price discounting, to reinforce revenues at a time when the economy is only just starting to show signs of improvement.”On any given day in the UK, an average of 100,700 hotel rooms are booked out in regional areas, 37,600 of which were in London alone.Hotel real estate in London experienced a huge boost prior to the Olympic Games, with millions of people pouring into the country to watch the action. Occupancy rates this summer are likely to be down in comparison.
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*This page is provided for information purposes only and should not be construed as offering advice. IPIN is not licensed to give financial advice and all information provided by IPIN regarding real estate should never be treated as specific advice or regulations. This is standard practice with property investment companies as the purchase of property as an investment is not regulated by the UK or other Financial Services Authorities.