According to Colliers International’s UK Hotel Market Index, the city reached the top of the index due to its low active pipeline, low build costs and strong hotel performance over the past three years.
Manchester was ranked second in the list, mainly due to its good investment and valuation parameters and strong hotel performance. Manchester also ranked highly in terms of rooms per population, with 3.75 rooms per 1,000 people.
Northern cities dominated the index, with five out of the top six locations in the north including Leeds (ranked third), Chester (fourth), Liverpool (fifth) and York (sixth).
The 36 locations analysed for the report total a current supply of 286,966 hotel rooms. London accounted for the majority of these rooms (47%), while Manchester and Edinburgh followed with 5% of the market share a piece.
Marc Finney, head of hotels and resorts consulting, said: “High land prices in London are causing investors to look outside of the capital for opportunities to spend their cash.”
“London is by far the largest market with almost as much supply as all of the other markets combined and has recently been a star in terms of revenue per available room. However, given that our index punishes high land costs, high construction costs, sluggish growth in 2015 and a strong active pipeline, London only ranks seventh in our index.”
Cambridge, Hull and Belfast were found to be the markets with the highest share of new supply entering the market (29.4%, 22.7% and 21.1%, respectively), while Coventry, Warrington and Sheffield were named as the locations offering a “more affordable” development proposition.
Belfast, Glasgow and Manchester come out on top for occupancy levels in 2015, each reporting levels above 80%.
Meanwhile, Bradford and Hull ranked the lowest overall due to average daily rates below the national average.
The report uses nine key performance indicators (KPIs), including; land value, room occupancy rates and construction costs to give 36 locations across the country a score from one to five.