Colliers International, the global real estate adviser, has announced that Edinburgh is the UK’s top city for hotel development in its UK Hotels Market Index. The city moved up four places in 2017 due to its strong occupancy levels and average daily rate (ADR) growth.
The Index analyses 34 locations across the UK, ranked to determine which are the ‘hot spots’ for hotel development and acquisition across the country. The report, which is in its third year, paints a positive picture for the hotels sector.
According to the report, regional markets have continued to catch up to London in terms of their attractiveness to investors and cities such as Hull and Plymouth entered the list of top 10 ‘hot spots’ for hotel development and acquisition in the UK for the first time in 2017.
“Apart from London, Edinburgh is the most popular city for visitors in the UK. It is therefore of little surprise that this is also reflected in the popularity of Edinburgh as “hot spot” for hotel development. This is further augmented by Edinburgh’s role as an important commercial, financial and political centre, which helps drive demand. The continuing growth in passenger numbers at Edinburgh Airport, alongside the ongoing worldwide popularity of Edinburgh as a ‘Festival City’, is a further indicator of its strength,” said Alistair Letham, a director in the UK hotels agency teams at Colliers International in Scotland.
The second place was occupied by Bath, which moved ten places up, while Belfast was positioned third, improving its ranking by a significant 16 spots due to the city’s robust and positive four year RevPAR trend together with relatively low land site prices.
The cities are scored using nine key performance indicators from one to five (one being the lowest and five the highest). The indicators include average daily rate, build costs, land site prices, room occupancy rates, construction costs, market appetite, active pipeline as a percentage of current supply, valuation exit yields, and RevPAR trend.
“Of course this is a general market index and site specific factors will lead to significant variances but the data demonstrates which cities investors should be watching and offers a credible indication to influence their decision making process,” concluded Marc Finney, head of hotels & resorts consulting, Colliers International.
