UK Hotel Market Index 2020

Services
Experts
Research
Find Property
Locations

Home
UK Hotels Market Index 2020
UK Hotels Recovery Index

The UK Hotels Market Index (UKHMI) is an innovative market tracking index that analyses nine key performance indicators of 34 cities in the UK and consolidates these into a single ranking.

The criteria considered are:

GVA per capital

Build Costs

Land Site Prices

Active pipeline as a % of current supply

Market Appetite

Valuation Exit Yields

Room Occupancy

Average Daily Rate

Four year RevPAR Trend

The above criteria are then weighted to give an overall weighted index figure scored on a scale of 1-5 with 1 being the lowest and 5 the highest. By consolidating such varied criteria into a single figure we can see which markets are hot and which ones are not, for both acquisition of existing hotels but also the development of new properties.

We would like to thank all of those who have helped us with this research especially the team at STR Global and AM:PM, without access to whose data this analysis would not be possible.

Data provided by

RANKINGS

DEVELOPMENT/RevPAR INDEX

The Development/RevPAR index is a combination of the initial land cost, build cost, 2019 Occupancy and 2019 ADR (Colliers Index). This index ranks the best markets with regards to the hotel performance in relation to the cost of development.

TOP 5 OCCUPANCY %

The graph below shows the top 5 markets that recorded the highest Occupancy rates in 2019.

TOP 5 ADR

Top 5 markets that recorded the highest Average Daily Rates in 2019.

TOP 5 RevPAR GROWTH (CAGR 2016-2019)

Top 5 markets that have shown the most significant compound average annual growth in terms of RevPAR over the past four years. Some of these markets have grown significantly albeit from a low base.

ACTIVE PIPELINE

Total number of rooms expected to enter the market over the next two years as a % of total existing room supply as at 31st December 2019.

TOP 5 RISING STARS

Top 5 rising markets in the index

OUR OBSERVATIONS

Edinburgh remains at the top of the index for the third consecutive year, owing its position to consistently strong occupancy and ADR levels in 2019, a robust 4-year upward RevPAR trend, relatively low build costs and extremely strong market appetite as one of the most sought after cities for hotel investment in the UK. The Scottish city has also experienced a significant decline in its active pipeline, which is currently only 4.5% of its current supply, compared to 13.5% in the previous year, with over 1,000 rooms opening in 2019 including the 276-key Yotel property in Queen Street, and the 230-key Moxy hotel at Edinburgh Airport.

London has moved up four places to rank second in the index. This can be attributed to its RevPAR levels, which are the highest across the UK, but also continuous growth in demand for accommodation in the capital city, which has resulted in the strongest 4-year RevPAR trend amongst the markets analysed. York is positioned third, improving its ranking by eight spots. This is due to several factors, including 2019 occupancy levels of almost 84%; the highest in the UK, coupled with strong market appetite and low land prices. Manchester has climbed back into the top 10 as a result of improved market appetite and a lower development pipeline.

Chester, Glasgow and Cambridge have all fallen out of the top 10. Chester has experienced a negative 4-year RevPAR trend, predominantly due to weaker performance in 2019. This, coupled with a much higher active pipeline and reduced market appetite has led to its lower rankings. Cambridge’s active pipeline has also significantly increased to 22.5% of its current hotel stock, resulting in poorer rankings for the city. Glasgow, on the other hand, experienced an 8% decline in RevPAR levels in 2019, which has also led to a sluggish 4-year RevPAR trend.

Given that our 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. Of course this is a general market index and site specific factors will lead to significant variances.

View OUR SERVICES