Today’s news in brief – 2/11/23
The UK hotel industry enjoyed a September boost driven by strong demand for staycations during the Indian summer, as per the RSM Hotels Tracker. Occupancy rates in the UK and London rose by 3.6% and 5.2%, respectively, compared to the previous September, while average daily room rates and revenue per available room surged, resulting in increased gross operating profits for UK hotels. RSM UK’s Chris Tate attributed this growth to the extended summer and consumer interest in UK staycations but cautioned about potential challenges, including a drop in consumer confidence in October and potential train strikes during the festive season, calling for government reassurances to protect the hotel and leisure industries.
Family-owned Apex Hotels Limited reported a significant financial performance improvement for the 12 months ending April 30, 2023, with an operating profit of £14.5m, up from £2.9m the previous year, and a 58% increase in turnover from £47.3m in FY 2022 to £74.8m in FY 2023. Strong demand from business and leisure guests drove this growth. After selling Apex London Wall Hotel and securing a £60m five-year refinancing deal with Barclays, the group is pursuing an acquisition strategy, beginning with the purchase of Pitlochry’s Pine Trees Hotel in July, aligned with its expansion plan targeting popular UK destinations.
Spanish boutique hotel group Room Mate Hotels made its first entry into the London market by acquiring the Lime Tree Hotel in Belgravia, a grade II-listed 26-room hotel known for its prime location and reputation. Positioned near Buckingham Palace, the hotel features a private garden, an all-day café called The Buttery, and a menu offering brunch classics and specialty drinks. Room Mate’s founder and president views this acquisition as a means to strengthen the brand’s overseas presence, expand in the UK market, and praised Lime Tree’s charm and design, with plans to maintain its current operation.
The UK has approximately 22,500 hotel rooms under construction, set to enter the market by the end of 2026, with most opening next year. Construction has faced challenges due to higher costs and an elevated interest rate environment, impacting new development funding and slowing down construction in recent months. However, the completion of projects delayed by the pandemic has prevented a significant drop in new hotel room construction. While London leads in rooms under construction and final planning, regional markets are driving supply growth. Glasgow, Liverpool, and Leeds face higher supply-side risks, while Northern Ireland and Edinburgh have growing final planning pipelines that may pressure hotel stock if all projects proceed. Development is expected to slow in the coming years as current plans are completed, but the UK remains an attractive market for hotel brands and operators, with a shift towards more conversion projects, given increased vacancies in retail and office properties and a focus on sustainability in the evolving economic environment.
