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The combined value of transactions in the hotel industry for 2017 was £4.6bn, nearly double that of 2016.
On a quarterly basis transaction values were also high at £1.3bn for Q4 2017, the highest since Q4 2015. AlixPartners said the impact of the EU referendum in 2016 can be seen clearly in the value of transactions which dropped from £5.3bn in 2015 to £2.4bn after the vote.
Current levels of transactions are now similar to those of 2014 (£4bn) and 2015 (£5bn), although there the firm said there is still uncertainty as to whether they will remain at these levels in 2018 or drop back to that of 2016 (£2.4bn).
The group said there was a different picture in terms of demand over the quarter with revenue per available room (RevPAR) growth remaining slow across the UK in Q4 2017. Only Belfast reached double-digit growth and London recorded its first decline after four consecutive quarters of growth.
More positive results were seen in Edinburgh where RevPAR growth reached 7% in Q4 2017 and averaged at 12% over 2017. However, the company said the high number of visitors has raised concerns over infrastructure capacity and how well public transport can cope during peak times with the growing tourist numbers.
After four consecutive quarters of growth in RevPAR, London recorded a 1% decline in Q4. The firm said that with its numerous tourist hotspots this decline is it is likely to be attributable to the “returned strength of the pound”, which means that overseas visitors are no longer getting the “bargain exchange rates” enjoyed previously in London and across the UK.
Graeme Smith, managing director at AlixPartners said: “In 2017, hotel performance in the UK was bolstered by the depreciation of sterling. Building top-line growth off strong comparators is likely to be challenging, particularly given the returning strength of the pound.
“Given this, and escalating cost pressures, 2018 is likely to be a softer year for profitability; experienced investors appear to be calling the top of the market due to the barrage of exits in the second half of the year.”
