Zolfo Cooper, HVS and AM:PM have released their Hotel Bulletin for Q2 2013, whose key themes include:
- consistent improvement in RevPAR and cost control has resulted in the regions’ increasing profitability on a last twelve months basis for the first time since the downturn
- strong RevPAR growth in most UK cities, but good performance exaggerated by the impact of the Diamond Jubilee celebrations on trade in 2012
- low new supply levels in the quarter but strong pipeline levels
- a number of single asset sales suggesting that the gap in valuation expectation is continuing to narrow
- the debt market for hotels widening to include alternative providers such as debt funds, credit investors and family offices
- City focus: Liverpool’s recent performance is impressive given that the city’s room supply has doubled in the past decade. Investments being made in the city should improve corporate demand to add to the current strong leisure demand
The Hotel Bulletin Q2 2013 reviews demand and supply trends in the UK market, the new-build pipeline, and considers notable transactions that have completed in the past three months. The data is analysed by location to reflect the diverse nature of the UK market, with Liverpool examined in greater detail.
Demand data covers Occupancy, Average Room Rate and RevPAR for Q2 2013, comparing data points with Q2 2012 from HotStatsTM to draw conclusions on the state of the UK market. Similarly, supply data compares the numbers of rooms for each location at the end of Q2 2013 with Q2 2012 from the AM:PM database to examine hotel completion trends. In addition, pipeline data considers the number of rooms in development that have a confirmed opening date from AM:PM.
The bulletin seeks to make the connection between current demand and change in supply. It is important to make this connection to identify locations where changes in supply may have an impact on future trading performance, which is of particular concern in a UK market where total demand growth remains challenging.