LIVERPOOL EXCELS IN COLLIERS’ 2018 UK HOTEL MARKET INDEX

Date: 04/03/2019
Author: Colliers International
Company: Colliers International

Liverpool has enhanced its status as one of the UK’s hottest locations for hotel investment, according to the latest index by real estate advisors Colliers International.

Colliers’ UK Hotel Market Index is an innovative market tracking index that analyses nine key performance indicators in 34 cities in the UK and consolidates them into a single ranking.  Liverpool comes out strong in the overall ranking, with top performance in terms of occupancy, growth in revenue per available room (RevPAR), rising market appetite, active pipeline of rooms and development/RevPAR.

The key indicators of the Index in which Liverpool excelled are:

  • Top five occupancy – Liverpool ranked fourth behind only London, Edinburgh and Oxford with an occupancy rate of 81.8 per cent in 2018, a rise of 3.10 per cent on 78.7 per cent in 2017;
  • Top five rising stars – Liverpool rose to third position from eighth in the 2017 index, behind Chester and Gloucester and ahead of Newcastle and Brighton;
  • Top five RevPAR growth – Liverpool ranked as number one, with average annual growth of 7.3 per cent in revenue per available room over the past four years, higher than Edinburgh, Belfast, Birmingham and Plymouth;
  • Development/RevPAR Index – Liverpool placed third behind Edinburgh and Glasgow in terms of the best markets regarding hotel performance in relation to the costs of development;
  • Active pipeline as a percentage of total supply – in this category, Liverpool is ranked fifth by Colliers, with a current supply of 8,731 rooms and another 878 in the pipeline over the next two years, representing 10.1 per cent of current supply;
  • Overall ranking - Liverpool is top three in the Hotel Market Index, rising from eighth position in 2017.

Manchester also performs well, with the city having a strong pipeline of hotel rooms becoming available over the next two years. The city is second only to London, with a current supply of 18,754 rooms and an active pipeline of another 2,210 rooms, representing 11.8 per cent of current supply.

Chester emerges as the most improved hotel market, being ranked number one in the category of rising stars, ahead of Gloucester, Liverpool, Newcastle and Brighton, representing a marked rise for the historic centre from 11th position in the 2017 Index.

Chester also rose from 11th to fourth in Colliers’ ranking of the top 10 hotel markets overall, behind Edinburgh, Belfast and Liverpool in first, second and third respectively but ahead of Bath, London, Glasgow, Brighton, Cambridge and Leeds.

Key factors behind Chester’s success in both tables include growth in occupancy levels at its hotels and lower build costs when compared to other locations.

Marc Finney (pictured right), head of hotels and resorts consulting at Colliers International, said: “This year’s Index shows a strong performance for the North West of England, with Liverpool’s active pipeline ranking improving by eight spots bringing it into third place.

“This is mainly due to strong growth in both occupancy and average daily room rate (ADR), resulting in the highest four-year RevPAR trend, combined with improved market appetite and relatively low land site prices.”

Julian Troup (pictured left), head of UK hotels agency at Colliers International, said: “There continues to be high levels of demand for hotel development in the North West of England and throughout the wider Northern Powerhouse area from established global brands and emerging and alternative hotel and hospitality companies.

“The hotel market in the region therefore continues to offer an exciting and rewarding investment user class.”

Edinburgh remains at the top of the index, largely because of consistently strong occupancy and average daily room rate (ADR) levels in 2018, a robust four-year upward revenue per available room (RevPAR) trend and continuous strong market appetite. Belfast ranks second, moving up one place, predominantly as a result of continued strong performance and low building costs.

Given that Colliers’ UK Hotel Market Index punishes high land costs, high construction costs, sluggish hotel growth in recent years and a strong active pipeline, some markets will rank lower than expected. Furthermore, the UK Hotels Market Index is a general market index and site- specific factors will lead to significant variances.