The attractive regional hotel market
Continuing positive movements in the hospitality sector
Covering a vast area that extends across multiple counties and diverse submarkets, the Hotels Agency team based in Bristol is constantly adapting to the ever-changing conditions. Our reach extends to all counties in the southwest, encompassing the Isle of Wight and stretching northwards to the outskirts of the West Midlands. We are also actively engaged in the hotel markets of mid and south Wales. While coastal Devon and Cornwall, along with the picturesque Cotswolds, consistently exhibit high demand, the beauty of our work lies in the fact that there is always a compelling reason for someone to purchase each and every hotel and country inn we bring to the market.
The conclusion of the 2022 calendar year presented challenges. Several sales that had been agreed in the late summer and early autumn came under pressure and then fell apart. Surprisingly, the buyers’ decisions were not influenced by price fluctuations; rather, they stemmed from profound shifts in the prevailing conditions since the time of their initial agreement. The most concerning factors for buyers were the rises in interest rates and energy prices, which were further compounded by escalating food costs, staff wage increases, and the ongoing difficulties in recruitment. Naturally, once apprehension takes hold regarding a few matters, it becomes easy to find numerous other minor concerns that collectively erode confidence.
Stepping into 2023, there was a certain apprehension surrounding the market's performance. Fortunately, the outcome has been considerably more positive.
Viewing rates throughout the region have shown a notable increase, and although we cannot classify it as a booming market, sales have been successfully agreed and are currently progressing well.
Confidence, choice and charm
Buyers have a confidence that they understand the economic environment that they are buying in and believe that it will stay stable in the short term and improve in the longer term. With that confidence, they are able to commit to making purchasing decisions.
With interest rates probably close to their peak now, the fear of continuing rising rates will have less of an impact on buyers. After a period when the numbers of businesses for sale has been lower than is typical, it is likely that there will be more supply available in the coming months as owners, having held on for longer than they normally would have, decide to sell. This is good news for buyers who have often found the choice available limited.
The buoyancy of the premium residential market has supported values of smaller hospitality businesses. Moreover, there is still a steady stream of lifestyle buyers looking to escape corporate life and run their own bed and breakfast business. There are undoubted challenges for operators at the moment but the appeal of owning a hospitality business is enduring.
Peter is a director in our Hotel Agency team and has spent almost his entire career working with the hotel and leisure industry as a chartered surveyor with expertise in valuations and transactions. Since 2005 he has focused on a purely agency role focused on the market in the south west of England.
