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Transactional volumes for UK hotels reached £2.8bn in 2023, down on the five-year average of £3.24bn, Savills has reported.
While the industry weathered a “turbulent” year, many commercial real estate transactions took place in the fourth quarter. According to Savills, this is indicative of improving investor sentiment.
Based on the firm’s current pipeline, Savills has forecasted some £4bn worth of UK hotel transactions over the next 12 months.
Savills research has revealed a demand for boutique and ‘lifestyle’ hotels outside of UK cities, as investors are recognising the potential of niche markets.
Meanwhile, the company has seen an increase in pod or micro hotel stats, as they can be up to 22% cheaper than a traditional budget hotel in the same area.
Recent examples of activity in this market include Melford Capital’s conversion of London’s SoHostel, comprising 775 capsule beds and a large roof terrace.
Robert Stapleton, director of hotel capital markets, said: “It’s no surprise that the hotel sector remains resilient in the face of uncertainty, and it’s positive to see it bouncing back from the negative impact of the pandemic.
“Hotels are the second oldest asset class after houses – and consumers continue to seek a home away from home to visit new sites, friends and family. Investment into the UK market will get back to its five-year average, and we look forward to seeing how it performs in 2024.”
