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Savvy investors cash in on booming hotel market in Britain’s favourite small city
April 26, 2012Article by Ray Withers
The most active market in Europe, the Middle East and Africa (EMEA) according to Q1 2012 figures from Jones Lang LaSalle, UK hotel investment remains on the rise with savvy investors cashing in on the boom in Britain’s favourite small city, York (YouGov independent poll, 2011).
Heralded as a “bright and resilient sector” by PwC in their European Cities Hotel Forecast 2011 & 2012, the UK hotel industry saw positive growth in 2011 with the regions experiencing a 0.8% increase in room yield to £44.12 per night and a 1.5% increase in occupancy to 70.8% according to data from PKF Hotel Consultancy Services. The city of York itself ranked second in a league of 2011 occupancy rates compiled by industry analysts STR Global with a healthy occupancy level of 80.1%.
Commenting on the positive position of the UK’s regional hotel sector, Ray Withers, CEO of hotel investment experts, Property Frontiers, says:
“For some time now, investors have believed that London is the only location in the UK to consider making a successful hotel investment. This is quite simply not true.
As with any investment, it’s about looking at the fundamentals of supply and demand and for this very reason we have identified Yorkshire and in particular the city of York, with its 7 million annual visitors and shortage of hotel rooms, as an opportunity seriously worth exploring.
“The statistics speak for themselves with the Chief Executive of Visit York reporting a 2% increase in average room rates in the city during last summer compared to the same period in 2010 and PwC forecasting growth rates of regional hotels increasing by 2.4% and RevPAR by some 2% in 2013, an investment in the York hotel market is a shrewd move.”
A ‘honeypot’ tourism destination in its own right, the city of York, which celebrates its 800 anniversary of self-governance this year, is one of the UK’s most popular destinations both with domestic and international visitors. According to the tourism organization, Visit York, over 7 million people visit annually with 81% having been to York previously and 84% likely to come back within the next 2 years. York is also currently being promoted as a destination of choice to the Chinese as part of the year long, UK Now programme.
One of England’s most historic cities, timelessly manifested through its beautiful buildings and monuments dotted throughout the city, York offers visitors diversity of culture and world class visitor attractions all set amidst stunning architecture steeped in history. York Minster, the largest medieval gothic cathedral in northern Europe welcomes at least 1 million guests each year alone in addition to the hugely popular Jorvik Viking Centre, York racecourse and rural leisure activities located in the stunning Yorkshire Dales.
The city of York is also expected to benefit from the forecast influx of some 320,000 tourists for the London Olympic Games this summer with 19% of Games visitors planning on visiting somewhere else in the UK during their trip (SLH, 2012). With this in mind, York-based train operator Eats Coast is putting on extra services between York and London, making it even easier to visit this historic city.
For those investors keen to cash in on York’s growing tourism demand and booming hotel sector, Property Frontiers has just launched its latest hotel investment project – Tulip Inn at Burn Hall. A fully operational and trading hotel set in 8 acres of beautiful countryside, 20 minutes from York, Tulip Inn at Burn Hall offers investors the rare opportunity to access an asset class not usually available to individuals.
Investors are able to purchase an en-suite hotel room for £49,950 which is then leased back to the hotel owner (which as of 15th September 2012 will be Tulip Inn, part of the second largest hotel group in Europe, the Louvre Group) who manages the room on the investors’ behalf. With 50% non-status finance available and cash-on-cash returns of to 23% in 2017, this is certainly one hotel investment not to be missed.