Cambridge forecast as one of five top cities for hotel investment in 2018


Cambridge ranks fourth in the latest UK Hotels Market Index.

Cambridge has been dubbed ‘the city to watch’ for hotel investment in the UK in 2018, according to Colliers International’s latest annual UK Hotels Market Index, which ranked the city fourth in a line-up. Experts at Colliers attribute the outcome to the city’s high Average Daily rates and a ‘very sought after’ Market Appetite.

Cambridge’s Average Daily rates are up 3.83 percent from 2017 to 2018 and the city has also witnessed a four percent increase in average room rates from £92 to £95 from 2016 to 2017. Furthermore, buyers are paying sharp yields for hotels (6-7.5 percent valuation yield) and the city is witnessing high occupancy figures (76.5 per cent).

The UK Hotels Market Index is an analysis of 34 locations across the UK, ranked to determine the ‘hot spots’ for hotel development and acquisition across the country.  Cambridge scored 3.68 out of 5, with Edinburgh (3.97) and Bath (3.90) pulling out marginally ahead.

On this year’s report, Marc Finney, Head of Hotels & Resorts Consulting at Colliers International, said: “The data in our third annual report reveals the ever-changing nature of the UK hotels market. It comes as no surprise that Cambridge has moved up two places, with such strong factors that are contributing to its investor attractiveness. Of course, this is a general market index and site-specific factors do also come in to play but our data provides a useful benchmark for investors during the decision-making process and reveals a number of markets which offer good opportunities but which may not have featured on some investor’s target lists previously.”

Key highlights:

Hot Spots

  •  Top 5 markets with highest ADR in 2017: London (£143 in 2016 vs £149 in 2017); Bath (£116 in 2016 vs £122 in 2017); Edinburgh (£94 in 2016 vs £103 in 2017); Oxford (£99 in 2016 vs £102 in 2017) and Cambridge (£92 in 2016 vs £95 in 2017).
  •  London has climbed back into the top 10, mainly because of the capital city’s recovery in ADR performance for 2017. The capital continues to be the largest market and in terms of RevPAR, it is still the top performing market.
  •  Manchester has fallen out of the top 10, having experienced minimal RevPAR growth in 2017, as well as a relatively large development pipeline and increasing land costs.
  • 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 2017: London (11,120 – 8.1%); Edinburgh (2,111 – 14.5%); Manchester (2,073 – 11.6%); Glasgow (1,525 – 14,4%); Belfast (1,352 – 33.9%) and Liverpool (1,170 – 14.3%).
  • Top 5 markets that have shown the most significant compound average annual growth in terms of RevPAR over the past four years: Belfast (12.6%); Hull (9.7%); Plymouth (8.4%); Sheffield (7.6%) and Edinburgh (7.5%).
  • Development/RevPAR Index – The top 5 markets with regards to hotel performance in relation to the costs of development: Belfast (4.38); Edinburgh (4.31); Bath (4.27); Cardiff (4.08) and Glasgow (4.08).

Top Ten UK Hot Spots for Hotel Investment and Development:























Marc Finney continues: “This year’s index shows the usual suspects and many of the top ten will not be a surprise to those from the sector.  However, it does also reveal a number of markets which offer good opportunities but which may not yet feature on everybody’s target lists.  It is noticeable how markets like Plymouth and Hull have started to catch up on lost ground during the last cycle.”

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