UK investment in the Hotel Industry has increased by 28% year on year reaching 3.2billion GBP as of the first half of 2018. This is driven by portfolio sales accounting for 71% or 2.3billion GBP and dominated by overseas buyers accounting for 51% or 1.6billion GBP. Most active amongst the overseas buyers are Canadians investing 24% and Israelites 14%.
Martin Rogers, the head of UK hotel transactions at Savills predicts the Hotel Investment Industry to remain active and total investments to reach approximately GBP5.4billion by end 2018.
10 Hotel Investment Trends You Should Know Before Even Starting Your Business in the UK.
1.Familiarize with the brands available. Before you select a hotel to invest in, make sure to do thorough research on the prospective brands. This is normally achieved through a due diligence process and there are many 3rd party professionals who can perform this for a fee. Factors to consider are the present financial condition of the brand and its short term and long -term prospects;
2.Decide on which market to prospect and focus on it. While taking considerations of the prevailing hotel brands in the global arena, you must zero in on UK market which is your prospective market. Important are the current condition of government (consider the Brexit and its impact to the hotel industry), peace and order, and the local laws which impact the hotel industry;
3.Know your investment budget by heart. Is your investment to be sourced internally or from bank borrowing or from private investors. Master your financial models and make sure to work around it. You wouldn’t want to arrange acquisition of a hotel asset in the UK which would not provide you with the acceptable cash inflows to cover your debt payments or dividend payments moving forward.
4.Know the fine prints in the contract before you sign. You do not need to be a lawyer yourself, but you might need legal assistance or perhaps a finance professional assistance for this very important philosophy. Remember that once signed a contract is binding and all parties concerned are expected to deliver. You wouldn’t want to include something in the contract specifically those with legal and/or financial implication which is not covered in your financial model.
5.Know and understand your hotel operators prior to making any investment decisions. Take note that your Profit and Cash forecasts are greatly leveraged with the Hotel Operator. It is important that you the investor and the hotel operator have the same mindset in terms of the prospective hotel operations.
6.Be concerned about the environment. You do not need to be a UK national for you to be concerned with your investment’s impact on the hotel’s environment. For in terms of our responsibility to the environment, we are global citizens. It is also good PR to the hotels clientele to be a supported of the green movement. For example, reusing unsoiled towels not only saves the environment but also cuts hotel costs which has a direct impact to your Profit and Loss.
7.If possible, get a guarantee on your investment. It is normal occurrence that investors get a guaranteed return on its investment and such guarantee is included in the contract.
8.Make sure to know your risks. Any investment comes with a certain degree of risk. And such risk must be covered in your financial model. Calculated risks are manageable risks.
9.Consider the landscape and apply foresight. Successful realtors always exhibit this trait. Know the upcoming improvements around the hotel, who is buying what property and why.
10.Take advantage of hidden extras. Many hotels provide defined proprietary usage to their investors. This could be a deciding factor depending on your preference.
Now you are ready to invest in your UK hotel property of choice.