August 2016

INSIGHT UK Leisure

Hotel Bulletin: Q2 2016 Q2 2016 saw polarisation of performance between the 12 cities reviewed in the Hotel Bulletin. London, Newcastle, and Aberdeen underperformed cities including Birmingham and Bath, both of which benefitted from an influx of international tourists. Overall, plateauing RevPAR growth suggests that many locations may have reached the top of the market. The transaction market picked up in Q2 2016, although this was skewed by the sale of Atlas Hotels which accounted for over half of the total acquisition value. M&A activity in H1 2016 was significantly lower than H1 2015, which is more reflective of market uncertainty. In this quarter’s Focus, we consider the potential implications of Brexit on the UK hotel market. FIGURE 1: Selected UK hotel markets – demand and supply

0%

(1)%

Glasgow 3% Belfast

0%

(25)% (24)%

0%

2%

(3)% 6%

9%

2% 10%

6%

(1)% (3)% (4)%

(1)% 6%

7%

Aberdeen

Edinburgh

7% Liverpool

3%

2%

6%

0%

10%

16% 6%

1%

7%

8%

Newcastle 0%

Birmingham

Leeds 0%

2%

2%

9%

0%

8% 11% 5%

Manchester 2%

0% (3)%

Bath Occupancy percentage change1 (Q2 YoY) RevPAR percentage change (Q2 YoY)

2%

(2)%

Cardiff 3%

8%

Average room rate percentage change (Q2 YoY) Supply percentage change since 30 June 2015

(2)%

London

Active pipeline >10%, 5 to 10%,