Business property advisers Christie & Co have provided an overview of the UK hotel sector in 2023, predicting positive growth in 2024.
There were reported signs of rebalancing across the UK hotel sector in 2023, with trading performance maintaining an upwards, albeit decelerating trajectory.
Plateauing interest rates and inflation levels improved sentiment, providing the market with some much-needed stability post-pandemic.
Transaction volumes progressively improved from the summer onwards and resulted in a stronger H2 for 2023. In addition, the bid-ask spread between sellers seeking value for strong trading performance and buyers having to factor increased debt costs into their pricing is narrowing.
There was a notable increase in hotel deals agreed between H1 and H2 2023 of over 81% which could positively impact transactional volumes during 2024.
Predictions for UK hotel market in 2024
Christie & Co’s predictions for UK hotels in the year ahead are a continued uptick in stock levels and transactional volumes driven by a wave of refinancings and government contract withdrawals.
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This is alongside a plateauing of performance particularly in leisure-led destinations as household disposal income is under pressure and will drive guests towards value-for-money accommodation.
Additionally, there may be further polarisation of the market towards economy and luxury segments with a squeezed midscale segment.
The hotel development pipeline will still be at risk in key markets due to increased debt and construction costs.
Christie & Co managing director of hotels Carine Bonnejean commented: “Activity has already picked up during the first few days of 2024 with a call to action from owners and lenders in particular.”