Rising confidence and greater availability of debt finance have stimulated deal-making activity in the region’s hotel sector, a new survey has shown.
So far this year there has been a 50% rise in transactions in the North East and Yorkshire hotel market, according to commercial real estate specialist Colliers International.
The rise reflects a national trend which has seen an upsurge in hotel investment activity, both from private buyers and investors.
Separate research from business advisors Deloitte said hotel transaction activity across the UK totalled around £1.5bn in the first half of 2014, 65% higher than the figure reported in the first six months of 2013.
Christopher Welch, a leisure specialist lawyer and partner at Sintons in Newcastle, said: “The upsurge in investment in the region’s hotel market is indicative of our thriving tourist economy. For business travellers, tourists and ‘weekenders’ alike, the North East and Yorkshire are increasingly popular destinations. In Newcastle alone, the existing stock of around 5,000 hotel rooms is set to be increased by 800 more in the next three years.
“However, while the levels of investment and increase in hotel provision are positive signs, hotel operators need to ensure they keep pace with the change in the industry.
“The rise of budget hotels, and also the continuing popularity of luxury operators, means that those in the mid-market need to offer excellent standards of accommodation and service while remaining competitive on price.”
Colliers International said significant investment was being made in smaller hotels in the North East, particularly in properties in the £500,000-£1 million price bracket.
Peter Bean, director of hotels at Colliers, said: “Hoteliers are reporting strong trade and we expect a lot more transactional activity during the rest of the year as buyers recognise the tremendous hotel acquisition opportunities available in the region.
“Adding to this, banks are much more supportive than previously and we are experiencing an increase in the amount of interest from new-to-the-industry hotel buyers, which is helping to bolster demand.”