Chester is the number one hot spot in the UK for hotel development, according to the latest Uk Hotels Market Index from Colliers International.
In an analyse of 34 locations across the UK for hotel development and acquisitions, Chester was ranked top mainly due to its good occupancy levels, an upward revenue per available room (RevPAR) trend and a low active pipeline.
The report uses nine key performance indicators (KPIs) to score each of the 34 locations a figure from one to five. The KPIs land site prices; build costs; market appetite; valuation exit yields; room occupancy; average daily rate; room occupancy rates; four year RevPAR Trend; active pipeline as a percentage of current supply and construction costs.
York ranked second in the list, moving four places up from last year, owing to good hotel performance indicators and a positive RevPAR trend, while Oxford came third – improving its ranking by 25 spots from last year – due to an increase in buyer demand interest, a low active pipeline in the city and good hotel market performance.
London continues to be the largest market and is still the top performing in terms of RevPAR. It also has the most active pipeline in terms of rooms expected to come to the market over the next two years (13,499).
However, given that the index punishes high land costs, high construction costs, sluggish hotel growth in recent years and a strong active pipeline, some markets rank lower than expected and as such, the UK’s capital city has fallen out of the top 10, having experienced a drop in RevPAR (1.2%), a large development pipeline as well as high land costs.
Meanwhile, Cambridge moved up 15 spots from 2016, Belfast improved by 12 spaces, Nottingham is 10 rankings higher and Swindon is 9 slots ahead of the 2016 index.
Marc Finney, head of hotels and resorts consulting at Colliers, said: “Cities such as Oxford and Cambridge have really upped their game in the last year to make it into the top five, despite failing to score in the top 15 last year.
“Of course, this is a general market index and site specific factors will lead to significant variances but the data demonstrates that London is not the only city that investors should be watching and offers a credible indication to influence their decision making process.”