Hotel Britain 2014

leisure and hospitality
Hotel britain 2014

the guide to the performance of hotels in the uk
contents
Economy and tourism
uk hotel transactions
uk hotel development trends
11
Value Added Services
24
2013 survey results
17
WINNERS AND LOSERS
23
SUMMARY OF FIVE YEAR PERFORMANCE
26
THE ROAD AHEAD
33
Clairvoyant CORNER
35
SURVEY COVERAGE
37
BDO LEISURE AND HOSPITALITY SERVICES
38
Foreword
Have confidence, will travel
The UK has been through some dark economic times with several
false dawns, but it does look as if we might be nearing the real thing
at last. UK GDP is forecast to grow by 2.4% this year, and inflation
has beaten its target by dropping to below 2%. Nevertheless,
stringent economic precautions remain in place, while many of our
European counterparts are still trying to shrug off the recession.
That said, London remains the growth engine. Despite a difficult

comparison to the Olympic year, both occupancy and rooms yield
performed well, as visitors to the city reached record numbers.
London did experience a minor decline in AARR as it stabilised
occupancy, with the latter returning to pre-Olympics levels
meaning that the new supply was being quickly absorbed.
Broadly speaking, hotels have been one of the most resilient

sectors, responding well to the tougher conditions and adapting
to trends and shifts in consumer behaviour. We have seen that
Britons care deeply about their holidays and will cling to them
despite falling disposable income. What they have become is more
cost-conscious and attentive to service. As a result, new concepts
of limited service accommodation are developing to cater for these
attitudes, while hoteliers strive to offer rooms that make maximum
use of their space.
Unsurprisingly, 2013 hotel investments in the UK surpassed all

other EU countries, with a total of over 2.5 billion spent, the
highest figure since 2007. This year the trend is set to continue,
with some of this attention expected to flow back into the regions,
where investors are seeking good value for money deals.
Fast-changing times means that the industry must race to keep up,
devote more time and resources to new media to appeal to evolving
demographics. In particular, new market segments such as the
Millennials (broadly speaking, those born in the mid-80s onwards)
are already driving the changes with their embrace of technology
and their need for fast and personalised service.
UK hotels overall had a good 2013. This was especially true in the
regions, which outperformed London compared to the previous
year. Regional hotels performance was driven by the increase in
occupancy, while AARR remained stable. This has prompted new
confidence in the Regions, where the MICE market is also returning
to some extent.
At present the horizon looks brighter than it has for years.

Nevertheless, uncertainties remain. The fragile European economy,
as well as the referendum on Scottish independence, may pose
some threats to future growth. In spite of this, we remain confident
that UK hotels will continue to show the strength and adaptability
that has become their trademark.
Robert Barnard
Partner BDO
Leisure and Hospitality Services
the guide to the performance of hotels in the uk | hotel britain 2014
Economy and tourism

The UK economy showed tentative signs of
improvement in 2013, though it remained
fundamentally weak.
In December 2013 CPI inflation fell to 1.9%, its lowest level since
the onset of the recession and just below its target rate of 2%. This
bodes well for economic prosperity in the short term, though it is
likely to rise in the medium term as investment activity piles up.
Meanwhile the current account deficit dropped to -2.78% of GDP.
HSBC reported that this was mainly due to weak export growth
which can be partly blamed on continued troubles in the Eurozone,
the UKs largest export market. Moreover, stagnation in productivity
meant that some of the competitive gain was eroded by lower
labour costs.
The UK governments gross debt increased in 2013, amounting to
92.1% of total GDP. According to the ONS, the public sector net
debt was 1,231.7 billion at the end of November 2013, equivalent
to 76.6% of GDP.
The labour market has performed slightly better than the goods
market. The unemployment rate of the economically active
population is now 7.1% and the number of people in work is 30.15
million. Unemployment fell to its lowest level since April 2009,
with anaemic real wage growth and low productivity helping to
keep employment losses down. Employment is now just slightly
below its pre-crisis levels, mainly due to a rise in part-time workers
and entrepreneurs. Market participation has also increased due to
changes in marginal taxes and benefit incentives, together with
a small cohort of older workers seeking an additional boost their
retirement savings.
Despite all these positives, the economy is still a long way from a
strong and sustained recovery.
Table 1: UK Economic Indicators, 2011-2015f
Real GDP Growth (%)
2011
2012
2013f
2014f
2015f
1.12
0.17
1.43
1.87
1.98
CPI inflation (%)
4.45
2.84
2.70
2.30
2.00
Current account
deficit (% GDP)
-1.46
-3.79
-2.78
-2.29
-1.92
Government gross
debt (% GDP)
84.92
88.81
92.14
95.25
97.93
8.02
8.02
7.74
7.53
7.31
Unemployment (%)
Source: International Monetary Fund
forecast
Visitor numbers increase

Crowning two consecutive years of growth for international visitors,
2013 saw the most inbound trips for some time. Visitors reached
32.9 million, up by 5.8% from 2012. The highest figure since 2007,
it also reaffirms the importance of leisure travel to the UK, which
itself grew by 6.9% to 12.8 million.
Figure 1: Overseas visitors to UK, by purpose of visit 2009-2013
35,000
8.5%
30,000
Visitors (thousands)
The service sector has shown a bounce back since the recession,
while the sharp manufacturing decline has begun to reverse. Real
GDP showed a consistent 1.4% growth, led mainly by the services
sector which represents three-quarters of the UK economic
output, and beat even its pre-crisis peak. The IMF offered more
encouragement, forecasting a constant GDP increase of up to 2%
over coming years.
8.8%
8.9%
28.7%
28.8%
22.8%
23.5%
23.9%
38.2%
39.2%
39.0%
38.5%
39.8%
2009
2010
2011
2012
2013
10.4%
9.8%
29.4%
28.2%
22.0%
25,000
28.0%
20,000
15,000
23.8%
10,000
5,000
0
Holiday
Business
Source: International Passenger Survey, ONS
Visit family or friends (VFF)
Miscellaneous
hotel britain 2014 | the guide to the performance of hotels in the uk
Table 2: Overseas visitors to the UK, by purpose of visit (thousands)
2009
2010
2011
2012
2013
11,668 12,008
2012-13
% change
Holiday
11,424
11,961
12,781
6.9%
Business
6,579
6,793
7,238
7,422
7,931
6.9%
Visit friends or
family (VFF)
8,783
8,408
8,841
8,948
9,369
4.7%
3,103
2,935
2,710
2,752
2,812
2.2%
29,889 29,803 30,798 31,084 32,893
5.8%
Miscellaneous
All visits
Year-on-year
growth
-6.3%
-0.3%
3.3%
0.9%
5.8%
Although the market share of visitors from Europe held fairly stable
at 73%, actual trip numbers were up by 5.8%. This was mainly due
to the strong increase in European visitors to the UK from countries
outside the EU 15 (up 15.5%). Visitors from the wider EU and the EU
15 group were up 6.1% and 4.6% respectively. The market share for
North America declined slightly to 10.9%, though visitor numbers
remained fairly stable. Visitors from other parts of the world
increased by 10.5% to 5.2 million, mainly thanks to the Middle East
(Bahrain, UAE, Qatar, Kuwait), Asia (China, Hong Kong, Indonesia,
South Korea), and the Americas (notably Chile and Mexico).
Figure 2: Overseas visitors to UK, by source market 2009-2013
120%
100%
Visitors (%)
14.2%
14.6%
15.5%
15.3%
16.1%
80%
Figure 3 shows tourism expenditure within the UK over the last

five years. At time of going to print, domestic overnight stays and
receipts statistics were not available for the whole of 2013, so are
presented with year to date November, with the comparison to the
corresponding period in the previous year.
Domestic visitors were marginally down on last year, declining by
-1.1%, with domestic spending also down by -1.4%. Britons remain
cost conscious, travelling more in recent years to visit family and
friends and tightening their travel budget. After the snowy weather
in March 2013 which largely affected domestic travel, the heat wave
in July boosted outdoor tourism and seaside visits. Unfortunately
this was not enough to lift the results, as 2013 was competing with
a previous year that included both the Olympics and additional
bank holidays for the Queens Jubilee.
Nevertheless, inbound tourism experienced the opposite trend,
confirming the strong growth of recent years. Both visitor numbers
and expenditure increased, the former up by 5.8% to 32.9 million,
and spending reaching 21 billion, a stellar 12.3% increase on 2012.
Table 3: All UK visitors expenditure 2009 -2013
2009 2010 2011 2012 2013

Domestic visitors 122.5 115.7 126.6 126.0 112.6
(millions)*
Inbound visitors
(millions)
29.9
29.8 30.8
Domestic visitors
spend
( billions)*
20.9
19.7
Inbound visitors
spend ( billions)
16.6
16.9
Total spend in
UK on tourism
(billions)
YTD 2012-13
Nov 12 % change
113.9
-1.1%
31.1
32.9
5.8%
22.6
24.0
21.7
22.0
-1.4%
17.9
18.7
21.0
12.3%
37.5 36.6 40.5 42.7 42.7
0.0%
60%
73.9%
74.0%
72.9%
73.3%
73.0%
*Domestic visitors and spend presented as YTD Nov 13

Source: ONS, Overseas Travel and Tourism; Great Britain Tourism Survey
November 2013, Great Britain Tourism Survey 2012
40%
20%
11.9%
11.4%
11.6%
11.4%
2009
2010
2011
2012
10.9%
0%
North America
Europe
2013
Other Nationalities
Figure 3: All UK Visitors expenditure 2009-2013

140.0
30.0
25.0
100.0
20.0
80.0
15.0
60.0
10.0
40.0
5.0
20.0
0.0
Spend ( billions)
Visitors (millions)
120.0
2009
2010
2011
2012
2013
Domestic visitors (millions)

Domestic visitors spend (billions)
YTD
Nov 12
0.0
Inbound visitors (millions)
Inbound visitors spend (billions)
Source: ONS, Overseas Travel and Tourism; Great Britain Tourism Survey
November 2013, Great Britain Summary Tables 2012, Visit England
Passenger numbers
According to estimates from the UK Civil Aviation Authority (CAA),
it was a record year for total passenger numbers. These grew by
3.5% in 2013 reaching 228.4 million, with CAGR up by 0.7% to
reverse last years declining trend.
Heathrow continued to lead the way with 3.4% growth to 72.3
million passengers. Despite the UK hub being at almost full
capacity, the growth was driven by rising numbers visiting from
China and the Far East, especially during the summer months.
Gatwick too saw an increase in passengers, from 34.2 million to

35.4 million, after introducing new easyjet routes and international
routes to America. Stansted also bounced back from its poor 2012
with passenger numbers up 2.2% to 17.8 million. Bought early
last year by Manchester Airport Authority, Stansted Airport is
being refurbished and is adding extra air link services for its budget
airlines.
The other airport owned by the Manchester Airport Authority,
Manchester, also performed well, with strong summer figures
topping the 20 million passenger mark in June this last happened
in 2009.
But it was London City that experienced the highest rate of growth
in 2013. Passenger numbers increased to 3.4 million, a 12%
increase, as the airport saw a 25% jump in July passengers and
rolled out plans to almost double annual flights to 120,000.
Also performing well were the Scottish airports Edinburgh (up
6.3%) and Glasgow (up 2.9%). The former has enjoyed its first
monthly million passengers in July, and has begun a 150m
five-year planned expansion. Glasgow has posted 13 consecutive
months of growth, with December being its busiest month in five
years.
The general performance of the UKs other airports was also broadly
positive. Birminghams chartered flights and its links to Barcelona
and Islamabad pushed its figures up, while Bristol enjoyed its fourth
consecutive year of growth. Meanwhile Newcastle added new
routes to the Middle East.
Table 4: UK Passengers (in millions) 2009-2013
2009
2010
2011
2012
2013*
% change
CAGR (%)
2009-2013
Heathrow
65.8
65.7
69.4
70.0
72.3
3.4%
1.9%
Gatwick
32.0
31.3
33.6
34.2
35.4
3.5%
2.1%
2.8
2.7
3.0
3.0
3.4
12.0%
3.8%
Airport
London City
Luton
Stansted
Total London
9.0
8.7
9.5
9.6
9.7
0.8%
1.5%
19.9
18.5
18.0
17.5
17.8
2.2%
-2.2%
129.5
127.4
133.6
134.3
138.7
3.3%
1.4%
Edinburgh
9.0
8.5
9.4
9.2
9.8
6.3%
1.7%
Glasgow
7.2
6.5
6.9
7.2
7.4
2.9%
0.4%
Birmingham
9.1
8.5
8.6
8.9
9.1
2.2%
0.0%
Manchester
18.3
17.8
18.8
19.7
20.7
5.2%
2.5%
Other UK
47.3
42.3
42.0
41.4
42.8
3.2%
-2.0%
220.4
211.2
219.3
220.6
228.4
3.5%
0.7%
Total UK (inc London)

* 2013 figures are estimations
Source: UK Civil Aviation Authority
The outlook for tourism

According to VisitBritain, the tourism industry in the UK accounts
for over 127bn, while its value to the UK economy grows by 3.8%
per year. Travel and tourism are now worth 9% of total UK GDP.
Despite the prevailing winds of optimism, it must be remembered
that the world economy remains fragile. The immediate prospects
for the tourism industry hinge heavily upon future improvements
or deteriorations in travellers disposable income. At this point,
fortunes could turn either way.
Having said that, inbound tourism is likely to continue to grow,
stimulated in part by the growth of the UKs creative industries.
The traditional allure of Britain has been enhanced by exports such
as Downton Abbey and the film industry in general, placing the UK
third on an international survey for brand recognition.
Visitors flocked to the seaside in 2013, and this surge in domestic
tourism is likely to continue as travellers look for lower-cost
options. The package holiday is also likely to see a revival.
UK hotel transactions
The UKs hotel deal market seems to
have changed gear in 2013, driven
by improvements both in market
fundamentals and macroeconomics.
In Europe, the UK continued to be the top liquid market for
investment transactions in the hotel sector, as it benefited overall
from improved trading conditions. The total transaction value was
not only higher than in 2012, but also at a peak since 2007. For this
we can thank the market recovery, the decline of true distressed
sales, and the portfolio transactions in early 2013 that boosted
market confidence across the sector.
Foreign investors in particular flocked to the UK hotel market,
looking both at London and at primary regional opportunities such
as Manchester, Edinburgh, Leeds, Cardiff and York. US firms tended
to dominate the years deals, as Interstate bought both Sanguine
Hospitality and Chardon Management, while Starwood Capital
acquired the 22 Principal Hayley venues, and KSL bought the
Malmaison and Hotel du Vin portfolio.
Figure 4: Average value of transaction
The average transaction value in 2013 was 50m, up 55.9% from

the previous year. The UK hotel market witnessed the sale of major
assets such as the InterContinental Park Lane and the Metropolitan
by Como London hotels, as well as the return to portfolio
transactions of non-distressed assets.
However, the average price per key in 2013 decreased to 160,563,
a -25.8% decline from the previous year, because the majority of
the deals were part of a regional portfolio transaction. Furthermore,
as investment activity returned to the regions, it led to a fall in the
price commanded for single asset transactions, as this weighed on
the average price per room. Unsurprisingly, London garnered a lot of
interest in the wake of the 2012 Olympic Games, justifying the 30%
increase in average value per room.
Figure 5: Average price per room in UK hotel transactions
350,000
80
319,316
300,000
66,763,846
65,924,375
60
54,700,000
50,521,914
50
40
32,403,000
30
20
14,902,353
Average price per room ()
Average value per transaction ()
70
50,000
237,603
216,525
200,000
197,967
150,000
160,563
149,045
100,000
50,000
10
0
0
2008
Source: BDO Research
2009
2010
2011
2012
2013
2008
2009
2010
2011
2012
2013
The return of portfolio transactions
Bank debts offloaded and IPOs rising
2013 saw the return of portfolio transactions. In addition to those

already mentioned, these included the sale of the 42 Marriott
Hotels to the Abu Dhabi Investment Authority, totalling almost
8,000 rooms. Menzies hotel group was also sold to Topland for an
estimated 85m value, well ahead of expectations.
We may have seen the dawn of a new era of fundraising, as IPOs

become more prevalent in 2013. Blazing a trail were the recent
listings of Merlin Entertainment, which owns themed hotels in its
leisure parks, and Blackstones Hilton.
In fact 2013 started with a bang, with the first half of the year
seeing 60% of the total value of transactions thanks to the
numerous portfolio sales. As well as boosting market confidence,
this drove a growing consensus on pricing expectations for single
asset transactions that dominated the second part of the year
(with the only exception being the Menzies sale). Notable single
asset transactions in London included the InterContinental London
Park Lane hotel (acquired by Constellation Hotels Holdings for
301.5m), the Metropolitan (acquired by Como Hotel London),
the freehold of the Hilton London Heathrow Airport T5 (acquired
by M&G for 21m), and the 50% stake in the newly built Hilton
London Wembley (acquired by Oaktree Capital Management for
30.1m).
Regional activity also picked up in 2013, in particular with
Manchester, Edinburgh, Bristol and Leeds all seeing increased
activity. A notable Manchester deal was the sale of the Marriott
Victoria and Albert Museum hotel, while Leeds saw its Radisson Blu
and the Express by Holiday Inn Leeds Armouries changing hands. In
Edinburgh there was the sale of the Travelodge West End and the
Apex Waterloo Place Hotel, and Cardiff too got in on the action
with the sale of the Novotel Cardiff and the Premier Inn City Centre.
Meanwhile the Lloyds Banking Group began to offload its owned

debt, selling a portfolio of 38 hotels across the UK. RBS too is
expected to continue the trend of exiting assets in 2014. Banks have
become highly conscious of their investments and now seem poised
to offload non-core assets. As increased capital requirement is likely
to continue to impact on their balance sheet.
London calling say hello to the millionpound room

The capital continued its dominating trend from 2012, with around
75% of all hotel deals happening there. However regional hotels
did see improved trading conditions for the first time since the
recession, despite not experiencing higher average and median
prices.
The sale of the Parkes Hotel in London marked a milestone, with
the highest ever price paid per room in the capital (1,060,606).
This was more than 15 times the lowest price per room recorded in
London that honour goes to the Travelodge Woolwich, at 66,667
per room.
The highest price per room in the regions was paid by Hand
Picked Hotels for the 58 room Fawsley Hall the 15m total price
tag translating to 258,621 per room. As for the lowest, this was
another Travelodge the distressed 120 room Coventry Leofric
hotel, bought by Fielding Beaumont for 13,750 per room, to be
converted into student accommodation.
Table 5: Comparison of price per room for 2013 transactions in London

and the regions
2009
2010
2011
2012
Average (mean)
Median
Highest
Lowest
London
376,667
310,680
1,060,606
66,667
Region
74,867
62,521
258,621
13,750
Prospects for 2014

The trend should swing back this year towards more single asset
transactions, with the exception of the recent acquisitions of the
DeVere Venues and of Four Pillars Hotels by Starwood Capital.
Foreign investments in the UK will continue to grow, especially
outside London. Indeed, as the market recovers there should be
greater interest in regional hotels and fuller consolidation in the
sector.
Banks will be increasingly keen to offload distressed assets from
their balance sheet, especially for those businesses that are overleveraged. Sovereign funds, together with specialised investment
groups and private equity from Asia and USA, will continue to be
the main player in hotel transactions, as the UK continues to be an
attractive market for foreign investors.
The outlook for future transactions will also hinge on the brand
diversification of the budget sector. This includes the introduction
of the Hub by Premier Inn concept, the planned refurbishment of
Travelodge hotels across UK, and the entry or expansion of other
brands such as Moxy, Tune and Z hotels.
11
UK hotel development trends

Shifts in the market share among the top
10 chains can reveal how the UKs hotel
sector is evolving.
In Table 6 we can see the market segmentation for 2013, as
presented by room count and number of hotels. Whitbread is the
top brand for number of rooms (58,656) while IHG and Travelodge
are in second and third place with 39,609 and 37,911 rooms
respectively.
The budget sector is poised to continue its expansion, with
Travelodge planning substantial additions that will take its rooms
count to over 50,000. In addition, Travelodge already sits on top of
the list when analysing the number of hotels, as the budget chain
slice counts for 24.2% of the overall UK hotel market, or 517 hotels.
Table 6: Top 10 UK hotel companies
Company
Rooms
Hotels
Whitbread
58,656
IHG
39,609
Travelodge
% Rooms
% Hotels
383
21.2
18.0
281
14.3
13.2
37,911
517
13.7
24.2
Accor
25,998
197
9.4
9.2
Hilton
22,253
105
8.0
4.9
Marriott
13,548
67
4.9
3.1
Rezidor
10,075
50
3.6
2.3
Wyndham
9,466
95
3.4
4.5
GLH
8,279
36
3.0
1.7
De Vere
8,179
61
3.0
2.9
Others*
42,811
340
15.5
15.9
Totals
276,785
2,132
100
100
* Includes: Britannia, Jurys, Macdonald, WA Shearing, Millenium & Copthorne, Bespoke,

Imperial London, Choice, Qhotels, Puma)
Source: HotelAnalyst: UK hotel brand listing 2013
The largest supply of group owned hotels (31.4%) is within the

budget sector (see Figure 6) with both Whitbread and Travelodge
in the top three companies for number of hotels and rooms. When
analysing the branded segment, little change has occurred since the
previous year. The luxury segment has grown from 2.1% to 2.6%,
while the three star category has reduced slightly from 22.2% to
20%. However, this is likely to be the result of the inclusion of
classified guesthouses, which in 2013 accounted for 5.5% of total
establishments.
However, in the analysis of independently owned hotels we see
a completely different picture. The top end of the market has
remained fairly stable, with a market share of 0.5%. But all the
other types of classified establishments have lost some of their
market share, while unclassified hotels and guesthouses have
enjoyed a substantial increase from 56.3% to 72.5% (when
considered together).
This may be a result of the pressure exerted by branded hotels on
independent establishments, with the latter struggling to compete
with branded supply, and many being forced either to convert
or to close. The independent hotels supply has a history of being
more like to be reduced or converted, a trend that has accelerated
over the recent years of recession. Most affected by this decline in
market share are the three star establishments, which declined from
25% to 15.9%.
12 hotel britain 2014 | the guide to the performance of hotels in the uk
Figure 6: UK hotel supply by segment, group owned vs independent owned 2013

100%
Figure 7: Number of new added rooms 2009-2013

18,000
5.5%
90%
15,868
16,000
19.7%
37.2%
80%
14,000
70%
12,000
60%
31.4%
10,000
11,185
9,944
8,990
50%
35.3%
2.5%
40%
8,000
7,659 6,552
6,000
20.0%
30%
7.1%
20%
4,668
3,207
2,612
15.9%
18.3%
10%
0%
5,189
4,000
2,000
2.6%
4.1%
Group Owned
Independent
5 star
4 star
Branded Budget Hotels

(eg. Travelodge)
3 star
0.4%
0
2009
2011
2012
New opening
1 & 2 star
Unclassified
2010
2013
Rebranding / refubishment
Guesthouses
Source: Hotel Data
Source: Wordsmith and Company, Hospitality Digest 2014
Pipeline slows down after 2012

The UK hotel industry accounts for over 600,000 rooms distributed
across 45,800 hotels, according to the British Hospitality
Association (BHA). After adding approximately 18,000 rooms in
2012 the pipeline has slowed down, with only 200 hotels opening
or planning to open between 2013 and 2014. This equates to some
20,000 new rooms across the whole UK.
In 2014 London can expect a 4% increase in supply, or around
4,500 new rooms, while the regions will see a more modest 2%
increase with around 6,500 additional rooms.
The number of new-built rooms dropped by 51.7% to 7,659 in 2013

(see Figure 7). However the focus has been on rebranding, with
6,552 rooms re-entering the market, up 104.3% on the 2012 figure.
Considering the overall economic situation, compound annual
growth rate for the total of rooms in UK over the period analysed is
fairly stable at -1.2%.
the guide to the performance of hotels in the uk | hotel britain 2014 13
Developing trends
Return of the MICE market?
Millennials
The UK meeting industry singlehandedly contributed 58.4

billion to the countrys GDP in 2013, according to the Meeting
Professionals International (MPI) Foundation. Despite this positive
news, hotels have recently suffered from a decreased MICE market
share, especially for those located outside London where 30% of
national meetings take place.
The rise of the Millennials, or Generation Y, with their love of

technology and fast service, is poised to change the way hotels
interact with the outside world. This newly maturing demographic
is now challenging the industry to rethink its distribution, marketing
and public relation services. Hotels will need to raise their game to
keep up with media developments, with a greater focus on online
reviews, search platforms, and social networking for peer-to-peer
publicity. Within the next five years it is expected that online
information will overtake offline, so that even word of mouth will
mutate into word of web.
Return of select service
We have seen how reluctant Britons are to give up their holidays
and travels, even during hard times or recessions. Nevertheless,
even with the economic outlook currently improving, consumers
are remaining highly cost-conscious. As a result, new concepts of
limited service accommodation are developing or re-developing,
such as pay as you go and affordable luxury hotels. In particular,
maximising the use of bedroom spaces is proving pivotal in terms of
shaping the current industry, from both a consumer and an investor
point of view. This approach enables lower construction costs and
higher returns on investments, as well as lower room prices and the
something different that hotel customers are constantly searching
for.
Lately the industry has also seen the growing trend of home
swapping, with international websites enabling travellers to stay in
each others homes free of charge. Research is now being conducted
on their impact on hotels.
Regional hotels have enjoyed a modest rise in MICE activity

recently, as their occupancy grew in 2013. But despite claims from
the Global Business Travel Association (GBTA) that expenditure
will rise 3.7% in 2014, meeting activity remains well below prerecession levels.
New things on the menu for food and beverages
The food and beverage industry is currently enjoying something
of a makeover, with a raft of new trends emerging. These include
hotels hosting celebrity chefs, the new grab and go concept,
restaurant areas that focus on social interaction, and a concerted
effort to adapt to new segments or dietary requests from niche
markets. A notable example is the introduction of menus that cater
more effectively for visitors from overseas, in particular the growing
numbers from China and the Arab nations.
Planned Hotel Openings 2014

A selection of planned hotel openings in key cities
Aberdeen
148
Dundee
91
Stirling
44
Edinburgh
523
Glasgow
659
Newcastle
222
Liverpool
Manchester
518
703
Chester
63
Birmingham
300
London
Bath
99
Hook
70
Southampton
259
Christchuch
68
4,500
Gatwick
245
Brighton
Portsmouth
414
94
Number of new rooms

Source: BDO Research and Hotelsdata
London (circa 4,500)

Tower Hill Motel One
Company: Motel One
Rooms: 291
CitizenM: 2 hotels
Company: CitizenM
Rooms: 616
Shangri-La, at the Shard, London Bridge
Company: Shangri-La
Rooms: 202
Beaumont Hotel
Company: Corbin and King Hotels
Rooms: 75
Ham Yard Hotel
Company: Firmdale Hotels
Rooms: 100
Hoxton Hotel Holborn
Company: Ennismore Capital
Rooms: 174
Birmingham
Park Regis Birmingham
Companies: StayWell Hospitality Group
Rooms: 300
Grand Hotel Birmingham
Company: Hortons' Estate
Rooms: 152
Hook
Heckfield Place Hotel
Company: Heckfield Place
Rooms: 70
Brighton
Indigo Brighton
Company: InterContinental Hotel Group
Rooms: 94
Liverpool
The Titanic, Albion House
Company: Signature Living
Rooms: 350
Chester
Roomzzz Aparthotel, Chester City
Company: Roomzzz
Rooms: 63
Aloft Hotel
Company: Ashall Property/ Starwood
Rooms: 116
Christchurch
Travelodge
Company: Travelodge
Rooms: 68
Dorsett Shepherds Bush

Company: Dorsett Hospitality
Rooms: 317
Dundee
Malmaison Dundee (opened early 2014)
Company: Malmaison
Rooms: 91
Hilton Southwark
Company: Sojourn Hotels
Rooms: 281
Former Jolly Hotel

Company: Wetherspoon Hotels
Rooms: 25
Mondrian London
Company: Morgans Hotel Group
Rooms: 359
Edinburgh
Ibis: 3 hotels (one opened early 2014)
Company: Accor, Jansons Property, Peveril
Securities Ltd
Rooms: 523
Pod Hotel Trocadero

Company: Criterion Capital
Rooms: 583
Novotel London Wembley
Companies: Accor
Rooms: 235
Travelodge: 2 hotels
Companies: Travelodge,
Solum Regeneration Partnership
Rooms: 185
Premier Inn: 3 hotels (Premier Inn,
Hub by Premier Inn)
Company: Whitbread
Rooms: 523
Regional (circa 6,500)

Aberdeen
Village Urban Resort Kingswells
Company: De Vere Group
Rooms: 148
Bath
The Gainsborough, Bath SPA
Companies: YTL Hotels
Rooms: 99
Source: BDO Research and Hotelsdata
Holiday Inn Glasgow Green

Company: Intercontinental Hotels Group
Rooms 100
Motel One Princess Street

Company: Motel One
Rooms: 140
Village Hotel, Helix House
Company: De Vere Village Urban Resorts
Rooms: 120
Gatwick
Bloc Hotel, Gatwick Airport
Companies: Bloc Hotel Company
Rooms: 245
Glasgow
Villa Hotel Pacific Quay
Rooms: 120
Premier Inn Pacific Quay
Company: Whitbread
Rooms: 180
Hampton by Hilton
Company: Scot Sheridan
Rooms: 88
Travelodge Queen Street
Company: Scot Sheridan/ Travelodge
Rooms: 171
Doubletree by Hilton
Company: Interstate Hotels
Rooms: 87
Stanley Dock Tobacco Warehouse
Company: Harcourt Developments Ltd
Rooms: 150
Manchester
Hotel Football
Company: Red Property Services LLP
Rooms: 139
Travelodge Radclyffe Park
Company: L P C Living Ltd
Rooms: 156
Hotel La Tour Salford
Company: Hotel La Tour
Rooms: 223
Newcastle
Motel One
Company: Motel One
Rooms: 222
Portsmouth
Jurys Inn
Company: Jurys Inns
Rooms: 200
Village Urban Resort
Rooms: 214
Sheffield
Hampton by Hilton (opened early 2014)
Company: Hilton Hotels & Resorts
Rooms: 142
Southampton
Hilton at the Ageas Bowl, Southampton
Company: Hilton Hotels & Resorts
Rooms: 175
Travelodge Greenchurch House
Company: Travelodge
Rooms: 84
Stirling
Hotel Colessio
Company: Aurora Hotels Collection
Rooms: 44
15
17
2013 survey results

Our analysis covers a consistent sample of
456 hotels across the UK (totalling 78,228
rooms), with monthly data since 2009.
An initial glance at Figure 8 reveals that the industry maintained
its steady, if unspectacular upward trend, with some promising
indicators for the year to come.
Daily rooms yield in 2013 rose by 2.6% from the previous year to
81.50. One of the stand-out figures on the graph is the occupancy
level, which rose from 75.6% in 2012 to 77% in 2013, its highest for
some years. In terms of AARR, however, growth rates were almost
flat, up only 0.8% from 105.08 to 105.88. Meanwhile the fiveyear compound annual growth rate (CAGR) for rooms yield grew by
4.3% as the sector, boosted by London, continued to recover (see
Table 7).
Figure 8: Summary of performance, all UK hotels (2009-2013)
120
%
77.5
77.0
100
76.5
76.0
80
75.5
75.0
60
74.5
74.0
40
73.5
73.0
20
72.5
0
72.0
2009
2010
2011
AARR ()
2012
2013
Rooms yield ()
Occupancy (%)

Table 7: Summary of performance, UK hotels (2009-2013)
CAGR %
(2009-2013)
UK Hotels
2009
Occupancy (%)
Year-on-Year
growth(%)
AARR ()
Year-on-Year
growth(%)
Rooms yield ()
Year-on-Year
growth(%)
2010
74.0
75.8
2.5%
93.04
2011
2012
2013
76.0
75.6
77.0
0.2% -0.5%
1.8%
1.0%
98.37 102.54 105.08 105.88
5.7%
4.2%
2.5%
0.8%
68.81
-
74.58
77.90
79.47
81.50
8.4%
4.4%
2.0%
2.6%
3.3%
4.3%
Despite the proliferation of new hotels in the run-up to the London

2012 games, this extra supply was largely absorbed. Although 2012
occupancy did decline by 0.5%, it bounced back by 1.8% in the
following year. Overall CAGR occupancy growth was steady, with
a 1% increase, but the main driver of growth was AARR, which rose
by 3.3%.
London remains the growth engine for the UK hotel industry, even
though comparisons between 2013 and the Olympic year remain
largely academic. As ever, London hoteliers continue to engage in
skillful revenue management and marketing strategies to benefit
from the record visitor numbers.
Londons AARR was marginally down by -0.1% to 152.48, as the
2012 hike in rates weighed on performance. However, occupancy
slightly increased (up by 1.2%) to reach pre-Olympic levels (83.1%).
Rooms yield grew too, up 1.1% to 126.65. The celebrations of
the Olympic anniversary and the Queens Coronation Anniversary
brought a boost for the leisure market, even as London welcomed
back the corporate market in the same year.
As we can see from Table 8, it was AARR that drove the capitals
results. Across the period from 2009 to 2013, the CAGR for AARR in
London was up by 5.4%, driving rooms yield up by 5.8%.
Figure 9: Summary of Performance, London Hotels (2009-2013)
Figure 10: Summary of performance, Regional Hotels (2009-2013)
180
%
84
160
83
140
%
74
70
73
60
72
83
120
100
82
80
82
60
40
50
71
40
70
30
69
20
68
10
67
81
20
0
80
2009
2010
2011
AARR ()
2012
81
2013
Rooms yield ()
2009
2010
Occupancy (%)
2011
2012
AARR ()
Rooms yield ()
Occupancy (%)
Table 8: Summary of performance, London hotels (2009-2013)
Table 9: Summary of performance, Regional hotels (2009-2013)
CAGR %
(2009-2013)
London Hotels
2009
Occupancy (%)
81.6
Year-on-Year
growth(%)
AARR ()
2010
2011
2012
83.2
83.0
82.1
83.1
2.0% -0.3%
-1.1%
1.2%
2009
Occupancy (%)
0.4%
123.70 136.66 146.04 152.65 152.48
Year-on-Year
growth(%)
- 10.5%
Rooms yield () 100.98 113.74

Year-on-Year
growth(%)
- 12.6%
6.9%
4.5%
-0.1%
6.5%
3.4%
1.1%
Year-on-Year
growth(%)
AARR ()
5.4%
Year-on-Year
growth(%)
5.8%
Year-on-Year
growth(%)
121.18 125.28 126.65
Rooms yield ()
Regional hotels also enjoyed better results in 2013, compared to

the previous year. A 3.5% rooms yield increase (to 51.99) was
driven by a 2.1% occupancy rise, up to 73%. AARR growth was more
modest, up by 0.6% to 71.22.
This occupancy-led performance is strengthening confidence in the
regions. Both occupancy and AARR also recorded positive CAGRs,
growing by 1.4% and by 0.6% respectively.
CAGR %
(2009-2013)
Regional Hotels
2013
2010
2011
2012
66
2013
2013
69.0
71.0
71.4
71.5
73.0
3.0%
0.6%
0.1%
2.1%
69.48
69.23
69.71
70.25
71.22
- -0.4%
0.7%
0.8%
1.4%
47.92
49.16
49.78
50.24
51.99
2.6%
1.3%
0.9%
3.5%
1.4%
0.6%
2.1%
A tale of positioning
Figure 11 analyses the rooms yield growth for London and regional
hotels top and bottom segments.
London deluxe and tourist hotels seem to have performed in
opposite directions. Although the deluxe segment rooms yield grew
considerably by 14.2% in 2010, the budget segment experienced
more modest growth of 6.7%. The following year the results were
reversed, with the top end growing by 5.6% while the bottom end
enjoyed a surge of 15.4%. In 2013 the tourist hotels growth rate
of 3.7% surpassed that of the deluxe segment, which was up only
slightly by 0.6%.
Occupancy was the main driver behind this. In 2011 London
experienced a steep increase in the luxury segment with the
opening, or re-opening, of a number of major deluxe hotels
including the Renaissance St Pancras, the Savoy, 45 Park Lane,
Corinthia and the Four Season amongst others. Then in 2013 the
flat performance of the deluxe segment was overtaken by the 2.5%
increase in occupancy and the 1.2% increase in AARR for the tourist
segment.
In the regions, hotels classified as 80+ experienced positive AARR
growth throughout the period analysed, while budget regional
hotels were more affected by low demand. Londons deluxe
segment recovered more quickly, though the performance was
hampered by new supply. Lower rated segments experienced slower
recovery at first, but this has gathered pace.
Focus on: London boutique and upscale

regional hotels
London boutique hotels were the only segment that managed to
increase their rates considerably in 2013, thanks to burgeoning
demand for such properties. Despite a 5.1% increase in AARR,
occupancy remained fairly stable at 78.5%, resulting in a rooms
yield growth of 4.6%.
The boutique segment was the years best performer in London,
even as the top end (usually a more stable category) experienced
the lowest increase in rooms yield, up by a modest 0.6% to
199.28. Regular travellers, including new segments like the
Millennials generation, continue to choose the boutique segment
as an alternative to more traditional upscale accommodation.
Hotel groups are recognising the importance of this bracket and
introducing new boutique hotel concepts such as W.
Figure 12: Rooms yield growth, London hotels
Townhouse/
boutique
Tourist
Business class
First class
International
deluxe
Rooms yield % growth
Figure 11: Top and bottom end of market segments growth

20%
Superior
deluxe
15%
De luxe
-5%
10%
0%
5%
10%
15%
2013
5%
0%

2010
2011
2012
2013
-5%
-10%
London deluxe
London tourist
Regional >80
Regional <50
20%
2012
2011
25%
2010
Figure 13: Rooms yield growth, Regional UK hotels
Table 10: Rooms yield growth London hotels
Rooms yield growth London hotels

Segment (AARR)
2010
2011
2012
2013
De luxe (>150)
14.2%
5.6%
4.5%
0.6%
Superior deluxe (>200)
20.7%
0.0%
6.7%
1.5%
International deluxe (150-200)
12.5%
6.7%
-0.1%
-1.4%
First class (100-150)
10.7%
8.2%
2.8%
1.6%
Business class (75-100)
10.5%
9.2%
2.3%
3.1%
Tourist (<75)
6.7%
15.4%
-4.6%
3.7%
Townhouse/boutique (>100)
9.1%
5.7%
3.2%
4.6%
<50
50-60
60-70
70-80
>80

Country House
Moving on to the regional hotel segments, we can see that the top
end of the market enjoyed the highest rooms yield growth rate, up
4.7% to 75.08, or 3.3% in the CAGR.
The results were driven by the increases in AARR, which grew from
97.52 to 101.33, a 3.9% growth. Occupancy remained more
stable, growing by 0.8% to 74.1%. The CAGR rate is also the highest
of all regional segments at 1.9%, underlining the increasing demand
for this product category.
-5%
-3%
-1%
1%
2013
3%
2012
5%
2011
2010
Table 11: Rooms yield growth Regional hotels
Rooms yield growth Regional hotels

Segment (AARR)
2010
2011
2012
2013
Country House
4.2%
1.8%
-1.3%
3.2%
>80
4.6%
3.1%
0.7%
4.7%
70-80
2.9%
1.6%
1.0%
3.8%
60-70
1.6%
0.7%
1.4%
3.3%
50-60
1.5%
0.3%
0.2%
3.0%
-1.9%
-3.4%
-2.1%
1.5%
<50
Winners and losers

All UK regions experienced positive trends
in 2013 when compared to the previous
year.
Rooms yield grew by 3.5% to 51.99, driven by the 2.1% rise in
occupancy levels (73%), while AARR also grew by 1.4% to 71.22.
UKs CAGR results for rooms yield were at 1.4%, as AARR remained
flat over the five years analysed, while occupancy grew by 1.4%
during the same period.
Scotland reversed its previous years negative performance to post
positive rooms yield growth in 2013, up 7.9% to 59.00.
Northern Ireland also performed well, driven by the performance
of Belfast that continued the trend started in 2012. For the first
nine months of the year, visitors to Northern Ireland were up 8% to
4.2m, with tourism expenditure also up by 6%.
Wales performance was driven by both increased demand and
AARR, up 1.7% and 2% respectively. A new air service linking Wales
and Germany started last summer, with the Welsh tourist board
unveiling a new strategy aimed at increasing its earnings from
tourism by 10% over the next seven years.
England also posted positive rooms yield growth for the fourth year
running, with rooms yield up 0.9% in 2013 when compared to the
previous year. This was mainly driven by the 0.8% increase in AARR.
All countries also posted positive change to CAGR rooms yield over
the last five years. Wales was the bottom performer at 0.4%, with
Scotland showing the higher increase by 3%.
Figure 14: Rooms yield growth by country
1.4%
Regional UK
3.5%
1.3%
England
0.9%
Wales
N Ireland
0%
7.9%
0.4%
3.8%
0.5%
6.0%
1%
2%
3%
4%
5%
6%
CAGR 2009-13
7%
8%
Liverpool reversed last year poor results, with rooms yield

increasing by 11.1% to 48.55. This was the result of increased
AARR (up 11.1%). Despite the positive results, the city still seems to
be experiencing a consolidation period, with occupancy remaining
below the 70% mark.
Stansted was the bottom performer in 2013, with a -5.8% drop
in rooms yield year on year to 36.50, again mainly due to a drop
in AARR (-4.4% to 52.18). However, increased routes and the
refurbishment of the airport have increased passengers, boding well
for future performance.
The top performer of the regional cities was Aberdeen. The city
posted a stellar rooms yield increase of 17%, mainly due to the
increase in AARR, up 18.8% to 90.29. In 2013, Scotland has also
been named the number one hot travel destination by CNN.
VisitScotland also unveiled a new 3.4m publicity campaign last
year. The campaign is expected to bring a return of about 68m
to the Scottish economy, and will target the key domestic market
as well as seven international markets: North America, Germany,
France, Spain, Italy, the Netherlands and Scandinavia.
Leeds also posted double digit growth, up 12.6% to 46.90, on
the back of rising occupancy levels (+7.6%) and AARR (4.7%).
Latest statistics show that Leeds is attracting 23m visits per year,
with average expenditure by the day visitor market hitting circa
683.43m per annum, according to VisitEngland. The opening of
new venues such as Trinity Leeds and the First Direct Arena, will
likely see a further increase in visitor economy volume and value.
Oxfords rooms yield also had a good rate of growth, up 11.8% to
88.93, thanks to increased occupancy (6.9%) and AARR (4.5%).
Oxford remains one of the most visited places in England, and the
officials estimate tourism there as being worth 880million a year.
3.0%
Scotland
Of the 36 reporting regional cities, 80% (29) posted positive rooms

yield growth year on year for 2013, whit the remaining seven
recording negative growth.
9%
% change 2012-13
Other strong achievers were Edinburgh (10.6% to 73.32); that

saw hotels prices rocketing during the 2013 Fringe Festival, and
Cheltenham (9.7% to 47.40) which saw both occupancy and AARR
increase.
Figure 15: Rooms yield growth, Regional UK cities
Aberdeen
Leeds
Oxford
Liverpool
Edinburgh
Cheltenham
Leicester
Reading
Chester
Portsmouth
Birmingham
Bath
Milton Keynes
Belfast
Cambridge
Manchester
Nottingham
Southampton
Cardiff
Bristol
York
Brighton
Maidstone
Glasgow
Windsor/Maidenhead
Northampton
Solihull
Norwich
Stratford-upon-Avon
Coventry
Derby
Heathrow
Swindon
Gatwick
Newcastle
Stansted
-8%
-3%
2%
7%
12%
17%
% change 2012-13
CAGR 2009-13
summary of five year

performance
2013
Occupancy (%)
% change
CAGR
No of hotels
No of rooms
2009
2010
2011
2012
2013
12/13
CAGR 09-13
All UK
456
78,228
74.0
75.8
76.0
75.6
76.9
1.8%
1.0%
All London hotels
152
31,463
81.6
80.7
82.9
82.0
82.9
1.2
0.4%
De luxe (>150)
58
11,074
79.8
82.1
81.5
81.8
82.3
0.6
0.8%
Superior deluxe (>200)
35
6,573
76.7
80.1
80.1
80.7
81.4
0.9
1.5%
International deluxe (150-200)
23
4,501
84.2
83.9
83.5
83.5
83.5
0.1
-0.2%
First class (100-150)
36
10,542
84.2
84.0
83.9
83.6
84.5
1.1
0.1%
Business class (75-100)
11
3,988
82.7
83.7
83.9
82.2
83.9
2.1
0.4%
Tourist (<75)
32
5,049
79.7
83.6
83.7
79.4
81.1
2.2
0.4%
Townhouse/boutique (>100)
15
810
79.2
78.6
79.5
78.8
78.5
-0.4
-0.2%
Regional UK
304
46,765
69.0
71.0
71.4
71.5
73.0
2.1%
1.4%
England
248
39,172
68.2
68.2
70.5
70.8
70.9
0.1%
1.0%
Scotland
40
6,129
71.9
74.2
74.9
74.2
76.3
2.8%
1.5%
Wales
11
1,520
73.4
73.2
73.0
73.0
74.2
1.7%
0.3%
N Ireland
670
77.7
73.0
72.4
80.0
80.2
0.3%
0.8%
67
10,426
70.2
72.8
73.6
73.5
74.1
0.8%
1.4%
>80
70-80
59
8,924
69.8
71.7
72.0
72.0
73.0
1.4%
1.1%
60-70
88
14,400
69.1
70.9
71.4
72.1
74.1
2.8%
1.8%
50-60
50
7,835
67.9
69.8
70.2
69.8
71.9
2.9%
1.4%
<50
40
5,179
66.3
68.4
68.0
67.3
69.4
3.1%
1.2%
Country house
41
3,424
63.9
66.5
66.4
64.5
65.8
2.0%
0.7%
Airport hotels
22
6,855
75.0
80.5
78.9
79.4
80.2
1.0%
1.7%
AARR ()
% change
CAGR
Rooms yield ()
% change
CAGR
2009
2010
2011
2012
2013
12/13
CAGR 09-13
2009
2010
2011
2012
2013
12/13
CAGR 09-13
93.04
98.37
102.54
105.08
105.88
0.8%
3.3%
68.81
74.58
77.90
79.47
81.50
2.6%
4.3%
123.70
136.66
146.04
152.65
152.48
-0.1
5.4%
100.98
110.23
121.05
125.15
126.47
1.1
5.8%
196.95
218.63
232.67
242.17
242.23
0.0
5.3%
157.09
179.46
189.52
198.13
199.28
0.6
6.1%
234.96
271.62
271.77
287.85
289.48
0.6
5.4%
180.24
217.61
217.61
232.25
235.63
1.5
6.9%
146.90
165.78
177.78
177.70
175.01
-1.5
4.5%
123.64
139.04
148.41
148.31
146.20
-1.4
4.3%
101.52
112.53
121.91
125.90
126.51
0.5
5.7%
85.44
94.58
102.30
105.21
106.87
1.6
5.8%
75.85
82.73
90.20
94.14
95.06
1.0
5.8%
62.69
69.26
75.65
77.42
79.79
3.1
6.2%
53.56
54.54
56.14
56.47
56.27
-0.4
1.2%
42.68
45.62
46.97
44.82
45.64
1.8
1.7%
214.02
235.34
245.89
255.99
268.96
5.1
5.9%
169.49
184.99
195.48
201.79
211.14
4.6
5.6%
71.29
69.23
69.71
70.25
71.22
1.4%
0.0%
49.22
49.16
49.78
50.24
51.99
3.5%
1.4%
68.48
68.48
68.39
68.87
69.40
0.8%
0.3%
46.67
46.67
48.23
48.73
49.17
0.9%
1.3%
73.01
72.92
73.59
73.64
77.29
5.0%
1.4%
52.47
54.11
55.12
54.67
59.00
7.9%
3.0%
72.38
73.13
71.45
71.17
72.63
2.0%
0.1%
53.10
53.53
52.17
51.93
53.91
3.8%
0.4%
67.73
64.27
61.30
63.31
66.90
5.7%
-0.3%
52.65
46.89
44.40
50.62
53.66
6.0%
0.5%
94.05
94.94
96.78
97.52
101.33
3.9%
1.9%
66.05
69.07
71.19
71.70
75.08
4.7%
3.3%
71.00
71.18
71.97
72.74
74.48
2.4%
1.2%
49.57
51.03
51.85
52.35
54.36
3.8%
2.3%
65.42
64.77
64.83
65.03
65.38
0.5%
0.0%
45.21
45.95
46.26
46.91
48.46
3.3%
1.7%
55.34
54.61
54.44
54.86
54.91
0.1%
-0.2%
37.57
38.12
38.24
38.31
39.45
3.0%
1.2%
48.35
46.00
44.69
44.18
43.49
-1.6%
-2.6%
32.05
31.44
30.37
29.75
30.19
1.5%
-1.5%
82.29
82.44
84.09
85.37
86.43
1.2%
1.2%
52.61
54.84
55.80
55.07
56.85
3.2%
2.0%
70.36
72.03
73.57
72.58
71.95
-0.9%
0.6%
52.75
58.02
58.05
57.63
57.71
0.1%
2.3%
summary of five year

performance
2013
Occupancy (%)
% change
CAGR
No of hotels
No of rooms
2009
2010
2011
2012
2013
12/13
CAGR 09-13
995
71.1
72.0
75.7
78.6
77.2
-1.7%
2.1%
Bath
425
73.7
77.3
75.2
73.7
74.9
1.6%
0.4%
Belfast
670
77.7
73.0
72.4
80.0
80.2
0.3%
0.8%
Birmingham
1,080
66.9
66.7
64.9
65.2
69.9
7.1%
1.1%
Brighton
851
65.7
67.5
69.5
70.2
72.2
2.9%
2.4%
Bristol
1,415
69.1
71.7
70.4
69.7
71.1
2.0%
0.7%
Cambridge
461
78.7
78.9
81.4
77.7
79.9
2.9%
0.4%
Cardiff
1,106
75.9
75.1
75.0
74.8
76.5
2.3%
0.2%
Cheltenham
358
66.1
70.1
71.0
70.2
73.8
5.1%
2.8%
Chester
369
70.9
65.6
65.2
68.3
70.1
2.6%
-0.3%
Coventry
270
61.7
61.1
60.8
59.8
62.5
4.5%
0.3%
Aberdeen
Derby
Edinburgh
360
57.1
60.0
59.6
65.9
68.6
4.2%
4.7%
13
2,216
76.6
76.0
78.7
77.5
79.9
3.0%
1.0%
Gatwick
1,094
72.0
78.2
73.8
80.0
79.1
-1.2%
2.4%
Glasgow
1,891
74.2
77.5
77.7
77.4
79.2
2.3%
1.7%
Heathrow
3,347
76.2
82.8
81.3
79.6
80.3
0.9%
1.3%
Leeds
1,177
73.7
73.2
72.2
71.4
76.8
7.6%
1.0%
Leicester
592
63.6
63.8
66.3
64.1
69.9
9.1%
2.4%
Liverpool
817
71.7
71.6
70.9
66.6
67.3
1.0%
-1.6%
Maidstone
423
69.4
70.1
70.5
71.5
71.5
0.0%
0.7%
Manchester
13
2,957
73.8
75.8
77.9
79.0
79.4
0.6%
1.8%
Milton Keynes
639
68.2
71.5
73.8
74.1
75.8
2.3%
2.7%
Newcastle
1,148
75.7
76.4
75.8
75.0
73.5
-1.9%
-0.7%
Northampton
415
59.3
63.0
64.9
67.6
68.4
1.1%
3.6%
Norwich
362
69.5
68.3
69.5
73.4
74.1
0.9%
1.6%
Nottingham
1,047
61.0
62.6
65.3
65.2
70.2
7.6%
3.6%
Oxford
357
71.1
74.3
77.0
76.2
81.5
6.9%
3.5%
Portsmouth
565
72.8
75.2
74.9
73.7
78.7
6.8%
2.0%
Reading
665
54.1
62.5
65.8
67.7
70.7
4.4%
6.9%
Solihull
1,542
58.8
63.0
61.8
64.3
63.7
-1.0%
2.0%
Southampton
668
68.5
70.0
71.8
72.7
74.4
2.3%
2.1%
Stansted
640
63.7
69.2
68.5
71.0
69.9
-1.5%
2.4%
Stratford-upon-Avon
486
66.2
68.5
69.4
64.9
64.3
-0.9%
-0.7%
Swindon
535
64.7
67.7
67.7
64.2
67.1
4.5%
0.9%
Windsor/Maidenhead
439
65.8
68.0
68.3
71.8
71.2
-0.8%
2.0%
York
515
82.4
81.1
82.3
81.5
81.3
-0.2%
-0.3%
AARR ()
% change
CAGR
Rooms yield ()
% change
CAGR
2009
2010
2011
2012
2013
12/13
CAGR 09-13
2009
2010
2011
2012
2013
12/13
CAGR 09-13
72.33
67.90
70.56
75.99
90.29
18.8%
5.7%
51.43
48.86
53.43
59.73
69.73
16.7%
7.9%
83.64
88.73
90.65
90.80
94.26
3.8%
3.0%
61.64
68.59
68.18
66.91
70.56
5.4%
3.4%
67.73
64.27
61.30
63.31
66.90
5.7%
-0.3%
52.65
46.89
44.40
50.62
53.66
6.0%
0.5%
59.19
61.51
59.06
56.32
56.12
-0.4%
-1.3%
39.57
41.05
38.30
36.75
39.23
6.7%
-0.2%
82.99
80.63
85.25
86.54
86.51
0.0%
1.0%
54.56
54.42
59.24
60.73
62.45
2.8%
3.4%
68.91
68.04
67.82
67.70
68.44
1.1%
-0.2%
47.61
48.77
47.74
47.19
48.68
3.1%
0.6%
85.51
88.93
89.39
93.48
95.75
2.4%
2.9%
67.33
70.13
72.74
72.58
76.53
5.4%
3.3%
75.02
75.75
74.36
74.64
76.04
1.9%
0.3%
56.91
56.85
55.80
55.80
58.17
4.3%
0.6%
62.14
64.12
61.37
61.53
64.25
4.4%
0.8%
41.07
44.92
43.55
43.20
47.40
9.7%
3.6%
67.40
65.42
64.22
65.26
69.36
6.3%
0.7%
47.80
42.90
41.87
44.60
48.63
9.0%
0.4%
58.91
58.42
56.06
57.51
54.93
-4.5%
-1.7%
36.34
35.70
34.08
34.38
34.31
-0.2%
-1.4%
61.12
59.88
57.67
60.21
56.88
-5.5%
-1.8%
34.89
35.95
34.36
39.68
39.05
-1.6%
2.9%
82.57
82.11
85.26
85.49
91.81
7.4%
2.7%
63.28
62.41
67.06
66.27
73.32
10.6%
3.7%
75.74
76.58
76.83
72.35
69.42
-4.1%
-2.2%
54.55
59.86
56.67
57.90
54.90
-5.2%
0.2%
66.57
65.55
64.47
64.21
64.06
-0.2%
-1.0%
49.36
50.80
50.07
49.69
50.72
2.1%
0.7%
73.15
76.89
79.62
80.14
77.32
-3.5%
1.4%
55.75
63.68
64.75
63.83
62.13
-2.7%
2.7%
59.99
58.75
57.70
58.36
61.09
4.7%
0.5%
44.19
43.00
41.64
41.66
46.90
12.6%
1.5%
66.42
65.44
64.77
64.12
64.38
0.4%
-0.8%
42.26
41.73
42.92
41.12
45.04
9.5%
1.6%
68.76
67.43
66.57
65.57
72.17
10.1%
1.2%
49.30
48.29
47.19
43.69
48.55
11.1%
-0.4%
61.18
62.72
63.29
64.33
65.89
2.4%
1.9%
42.45
43.99
44.60
45.99
47.09
2.4%
2.6%
71.30
71.64
72.65
73.16
76.45
4.5%
1.8%
52.65
54.33
56.62
57.79
60.74
5.1%
3.6%
59.97
59.31
62.67
64.01
66.64
4.1%
2.7%
40.90
42.42
46.24
47.41
50.51
6.5%
5.4%
67.92
67.02
66.86
65.80
63.55
-3.4%
-1.6%
51.38
51.20
50.68
49.34
46.73
-5.3%
-2.3%
64.13
64.19
65.37
64.81
64.88
0.1%
0.3%
38.04
40.45
42.41
43.82
44.36
1.2%
3.9%
61.60
62.62
63.11
63.45
63.25
-0.3%
0.7%
42.81
42.77
43.83
46.58
46.84
0.6%
2.3%
59.11
56.85
55.82
57.07
55.65
-2.5%
-1.5%
36.07
35.59
36.47
37.23
39.07
4.9%
2.0%
95.07
98.35
99.62
104.42
109.17
4.5%
3.5%
67.57
73.07
76.68
79.56
88.93
11.8%
7.1%
65.15
65.67
64.35
66.24
67.20
1.4%
0.8%
47.41
49.39
48.18
48.84
52.91
8.3%
2.8%
60.21
57.38
59.86
63.03
65.81
4.4%
2.2%
32.59
35.86
39.40
42.65
46.50
9.0%
9.3%
87.11
86.48
84.61
83.02
84.42
1.7%
-0.8%
51.20
54.51
52.28
53.40
53.74
0.6%
1.2%
62.33
59.25
57.52
60.06
61.60
2.6%
-0.3%
42.72
41.46
41.29
43.69
45.82
4.9%
1.8%
61.30
60.43
59.11
54.59
52.18
-4.4%
-3.9%
39.05
41.79
40.49
38.76
36.50
-5.8%
-1.7%
72.60
72.05
72.32
72.64
73.66
1.4%
0.4%
48.06
49.37
50.18
47.11
47.36
0.5%
-0.4%
64.25
60.40
61.78
66.14
61.25
-7.4%
-1.2%
41.59
40.92
41.80
42.48
41.12
-3.2%
-0.3%
85.05
84.74
87.85
91.23
93.83
2.9%
2.5%
55.98
57.60
60.00
65.48
66.82
2.0%
4.5%
65.61
65.40
64.22
67.57
68.51
1.4%
1.1%
54.04
53.04
52.83
55.04
55.67
1.1%
0.7%
31
The road ahead

The outlook for the UK economy continues
to improve, as relative stability returns to
the worlds largest trading partners.
In January it was announced that UK unemployment dropped to
7.1% during the last quarter of 2013, while inflation dropped to 1.9%
(below the Bank of Englands target of 2%). The UK economy is
predicted to grow by 2.7% in 2014, with economists expecting it to
witness some of its fastest growth since the recession.
A boost for both the capital and the regions

London
Having absorbed the new supply in the run-up to the Olympics,
London then had a period of low development which gave hoteliers
sustained levels of strong demand. Recent statistics indicate that
the whole country benefitted from record visitor numbers in 2013,
while London is reported to be one of the few host cities to see
visitation actually increase following an Olympic year. London and
Partners, the official tourism organisation for London, now claims
that the city overtook Paris in the ranking of most visited cities. As
such, the outlook for London remains positive, and we can expect
to see hoteliers turning their full attention to growing AARR as
occupancy remains at exceptionally high levels.
Regions
It has long been established that the performance of regional hotels
is closely linked to the national economy. In 2013 we saw strong
levels of demand for regional properties as a good summer and
lower disposable income prompted holidaymakers to stay in the UK.
The improving national outlook has also meant some movement,
albeit small, in the MICE market, though this remains below prerecession levels. Hoteliers in the regions have also benefitted from a
reduced pipeline in recent years, and the long awaited consolidation
of the sector should underpin future performance trends. The
outlook for the regions therefore remains positive. We can expect
to see occupancy levels continue to improve, with some growth in
AARR particularly in key secondary cities.
Investor optimism on the rise

Optimism in the UKs hotel industry is back, according to a survey
by Ipsos MORI for the think tank British Future. The State of the
Nation reports a two-year high for confidence in the economic
outlook, and claims that industry representatives are in fact twice as
positive about the coming year compared to a year ago.
2014 should also see more focus on regional UK. After a particularly
successful year, both investors and operators are seeing regional
hotels as good value for money when it comes to driving
investments and deals. Investments are expected to be 138% up
in the regions, according to JLL. Recent months have already seen
hotel groups actively consolidating and investing in potential
development sites.
Pressure on independents
The UK hotel sector remains largely independent, with a sizeable
census of smaller establishments. As brand proliferation continues,
with growing pressure on independents to improve their offering,
we can expect to see some of this supply reduced or converted.
Much has been written in recent years about the state and
condition of many independent properties, so it is likely that those
which fail to meet modern standards will have to change in order to
remain competitive.
Regulations, pressures and prospects

Entry visa rules for Indian business visitors were relaxed in 2013,
and this is highly likely to happen for the Chinese market too. The
UK government is also facing pressure from the tourism industry
to reduce taxes and align them to our EU counterparts, in order
to boost tourism development which is thought to be worth over
127bn to the UK economy.
However, as long as visitor numbers remain at such high levels
it is unlikely that the government will feel a need to bow to this
pressure. Another looming factor that could weigh on future
performance is the question over the independence of Scotland, and
what independence could mean for its membership of the EU.
However, some measures are being taken at present, for example,
the Chancellor has just announced that from 2015 the two highest
of the four air passenger tax bands are to be scrapped.
Competition
Win a one night

stay for two at The
Stafford London
Hotel, courtesy of the
Kempinski Hotel Group.
The prize includes a

night stay for two at The
Stafford London Hotel,
including breakfast and
dinner for two. Subject
to availability, valid until
November 2015.
About the hotel
How to enter
Kempinski Hotels and Resorts offer uncompromising standards

of service combined with distinctive style that reflects the
individuality of the properties and their location. Former
Palaces, alive with character and intrigue, stand shoulder to
shoulder with vibrant modern masterpieces enabling to live a
life with style.
All you need to do to enter is predict as accurately as you

can the occupancy and average achieved room rate (AARR)
per occupied room in BDOs sample of hotels in Britain for
the 2014 calendar year. Answers should be submitted in the
following format:
Tucked amidst the quaint, historical district of St James's off

Piccadilly, The Stafford London by Kempinski is a remarkable
setting to experience the very finest of London. Its surprisingly
discreet and peaceful setting is just steps away from the
city's hustle and bustle, the finest shops, the many cultural
attractions including art galleries, theatres and the royal parks
and palaces.
At The Stafford London Hotel, the traditionally classic English
heritage meets contemporary elegance, in its 105 individually
decorated rooms and suites.
1. Occupancy: ...........% (to 1 dec place)

2. AARR: ........... (to 2 dec places)
You can submit your answer at the Hotel Britain Launch
Event using the competition slips available, or by emailing
Melissa.X.Gardiner@bdo.co.uk, with Competition Entry in
the subject line. Entries close on 31 May 2014. Only one entry
per person. The winner will be notified by the 5 March 2015.
Winners will receive a voucher valid for redemption until
November 2014.
clairvoyant corner
from last year's competition winner

I was pleased to hear that the optimistic
approach of a property developer was
found to be realistic and my glass half full
approach has been rewarded appropriately.
How did I manage to guess correctly? Well Ive developed a good
oversight of hotels at MAGs four airports of Manchester, London
Stansted, East Midlands and Bournemouth and thats given me an
insight into hotel market performance through the changing times
of the sector. When you mix that with the market intelligence from
Robert and his team, I have a good basis for crystal ball gazing and
now I just need to transfer that foresight when I play the lottery.
David Roberts
Development Manager
MAG Property
Weve got an exciting year ahead at MAG Property. Were moving

ahead at pace with our Airport City project alongside our joint
venture partners here at Manchester Airport and looking forward to
continued growth across the business. We announced joint venture
partners in the shape of Carillion, Beijing Construction Engineering
Group (BCEG) and Greater Manchester Pension Fund in October
2013 and alongside Argent, 2014 will be a year of progress on site.
Airport City Manchester will be the core element of the UK
Government-designated Enterprise Zone surrounding the UKs third
busiest airport, Manchester. The Enterprise Zone is intended to
stimulate business growth through the provision of subsidies in the
form of business rate discounts, worth up to 275,000, super-fast
broadband, simplified planning procedures and the retention of
pooled business rates by the local authority for a period of at least
25 years.
Outline planning permission for Airport City Manchester was
secured at the start of 2013 and it will provide 5m sq ft of
development, a mix of offices, hotels, advanced manufacturing,
logistics and warehousing. DHL was announced as the first occupier
at Airport City Manchester in November 2013, taking a 37,308 sq ft
bespoke logistics building.
Survey coverage
Hotel Britain is the definitive guide to the
performance and prospects of the UKs
hotel industry.
It is compiled from the responses of a representative cross section
of 456 hotels comprising 78,228 rooms, and including 152 London
hotels and 304 around the rest of the country.
The results of this survey are grouped for convenience according to
geographic location. We break down the performance of hotels in
key centres across the country, and also analyse both London and
the regions in terms of average room rate.
Hotels in the capital are divided in four main bands according to the
average room rate achieved during 2013. The top rate band, Deluxe,
comprises superior deluxe and international deluxe properties.
This is followed by first class and business properties, with the final
category being tourist hotels. There is also a separate performance
breakdown, which extends across all these rate boundaries, for
townhouse properties. Regional hotels have been placed in one
of five rate bandings, with a separate performance breakdown,
which extends across all these rate boundaries, for country house
properties.
To ensure that our year-on-year results are directly comparable,
only properties able to contribute data from the last five years
have been included. Hotels which have closed for a period of
refurbishment or have opened during this period have been
excluded.
Glossary
Definitions of some of the terms used in this report are provided
below.

Room occupancy: the ratio of total occupied rooms to total

available.
Average achieved room rate (AARR): rooms revenue divided

by the total number of guest rooms occupied during the year.
(Average daily) rooms yield: room occupancy multiplied by

the average achieved room rate (also known as RevPar).
Current values: values expressed on an actual basis, including

the effects of inflation.
Constant values: historic and future values rebased to a base

year by removing the inflation element
Compound Annual Growth Rate (CAGR): average growth

rate on an annualised basis.
Participating hotel companies

Alongside the many individual properties which so kindly
contributed data to this survey, we would like to recognise the
invaluable participation of the following hotel companies:
The Ascott Group
Kew Green Hotels
Carlson Rezidor Hotel Group
Macdonald Hotels & Resorts
Choice Hotels Europe
Malmaison
Compass
Marriott International
Corus Hotels
MyHotels Group
English Lakes
NH Hoteles
Exclusive Hotels
Puma Collection Hotels
Firmdale Hotels
Q Hotels
First Inns
Queens Moat House
Four Pillars
Red Carnation Hotels
Four Seasons Hotels and

Resorts
Rocco Forte Collection
Hand Picked Hotels
Starwood Hotels and Resorts
Hilton Worldwide
Taj Hotels Resorts & Palaces
Hyatt Hotels and Resorts
The Doyle Collection Group
InterContinental Hotel Group
Thistle Hotels
Jurys Inn
Travelodge
Shire Hotels
ABOUT THIS REPORT

Research and Editorial:
Michele Pasqui
To order further copies of the report please contact:
Michele Pasqui
Tel: +44 (0)20 7893 3654
Email: Michele.Pasqui@bdo.co.uk
bdo leisure and

hospitality services
Our team works with international
businesses across the Leisure industries,
including Restaurants and Bars, Betting &
Gaming, Hotels, Professional Sports and
Fitness, and Travel and Tourism.
We provide assurance, tax and advisory services to our clients who
range from small owner-managed businesses to large corporations
in both the private and public sectors, but they are frequently
market leaders.
Hotels
Experience says a lot about a firm. BDOs hotel involvement
stretches back almost 100 years and our London office established
its sector consultancy in the early 1970s. Since then we have
undertaken thousands of assignments throughout Europe, the
Middle East, Africa and the Caribbean.
Our expertise covers the entire spectrum of investment and
operating activities and our involvement brings credibility,
competence and independence to any project. In short, if you are
active in the hotel industry then you should be talking to BDO, the
industry experts.
Our team of dedicated professionals is recruited from a range of
industry disciplines. They bring with them their knowledge of the
day-to-day issues that practitioners encounter; we provide them
with the skills of the consultant and a wider industry perspective
to produce a balanced approach to every assignment. The resulting
skills, resourcefulness and dedication are brought to bear on every
commission we undertake.
There is no other sector consultancy in Europe with a research and
performance database that stretches back as far as ours, or contains
the volume of information that we possess. Our research and
publications team, and the archive facility that they have created,
ensures that our clients and consultants have immediate access to
the latest authoritative data.
Specialist advice we can provide to the sector includes:

Feasibility studies
Business valuations
Strategic consulting
Litigation support/Expert witness services
Transaction support
Mergers and acquisitions including MBOs, MBIs and flotations
Fund raising and refinancing
Financial investigations
Systems reviews
Turnaround and distressed situations
Economic impact assessment
Betting and Gaming

BDO has acted as auditors, tax advisers and consultants to many
UK and international betting and gaming businesses, both private
and publicly quoted. Our clients have ranged from many of the
major bricks & mortar bookmaking and casino operators to major
offshore telephone and internet sports books, casinos, poker and
other online gaming activities. As well as the more traditional forms
of betting and gaming, we also act for FCA regulated businesses in
the financial trading, financial spread betting and CFD sector.
Specialist advice we can provide to the sector includes:

International tax planning and structuring
Corporate financing and flotations
Property and corporate acquisitions and disposals
Financial Services Act regulations and compliance
Installation of management reporting and controls and internal

audit functions
IT controls, environment reviews and systems improvement

advice
Feasibililty studies.
Restaurants, Bars and Pubs
professional Sports and Events
The current economic environment is providing significant

challenges to many businesses in this dynamic sector. The pressure
on consumer spend means that customers are now looking for a
higher quality experience at competitive prices - value for money is
key.
Our Sports and Events client base includes businesses as broad

as individual golf courses and public sector clubs to fitness centre
chains and listed football clubs. BDO therefore has a bank of
experienced specialists in this sector to help with your particular
business, no matter how niche you may believe it to be. You could
be the owner of an event site or business looking to change its
commercial purpose.
When combined with the effects of rising food costs and the lack
of available finance, these are certainly challenging times. The
BERR report is also providing many groups with challenges in
ensuring they are fully compliant with minimum wage and TRONC
regulations, whilst minimising tax leakage and the potential threat
of adverse publicity.
However, we believe that eating out is now established as a
behavioural norm - the best concepts and operators continue to
flourish and the availability of good sites and people provide some
great opportunities for growth.
BDO can help realise the opportunities and minimise the pressures
just as we have helped numerous clients to do, during our long
established history as a leading adviser in this sector. We have
advised clients as diverse as international brands and national
chains, to owner managed businesses and outlets looking to expand
and/or diversify.
Our expertise will assist whether you are the individual restaurateur,
the group operator, the restaurant franchisor or franchisee.
Specialist advice we can provide for your sector includes:

BERR report, TRONCS, minimum wage legislation
Tax efficient employee incentive plans
Property issues and the associated stamp duty and capital

allowances
Business acquisitions
Raising finance for business expansion public and private,

equity and debt
Franchise advice
Business restructuring strategies.
Or a public sector body looking for a private partnership to

transform an existing facility. Either way, we can help you realise
your strategy.

Funding for redevelopment and/or expansion
Private / public partnerships
Risk assessment and planning for site redevelopment or

relocation
Tax planning and compliance.
Travel and Tour operators

The travel sector has undergone some of the biggest changes we
have witnessed to one particular industry over the last few years. It
has been a roller-coaster ride of new entrants and new technology,
consolidation and unpredicted new challenges to business, such as
SARS and terrorism.
BDO has helped its travel clients turn a turbulent time into one of
opportunity. Our commitment to this sector has seen us attract
some of the best known names in the business from owner
managed private businesses through to large listed companies with
international networks. By working with leading organisations from
the travel industry, we ensure we are always developing new ways to
address your industry and regulatory issues. BDO is an ABTA Travel
Industry Partner and provides the section on Travel Agents and Tour
Operators for Butterworths Financial Reporting and Accounting for
Specialised Sectors. We have members on the ICAEW / ABTA Working
Group instigated by ABTA and also on the ICAEW/CAA Working
Group instigated by the CAA.
our Hotels team

For more information on any of our services for the hotel
industry, contact the relevant BDO expert below
Management Consulting
Robert Barnard
robert.barnard@bdo.co.uk
AUDIT
David Campbell
david.campbell@bdo.co.uk
AUDIT
Stuart Collins
stuart.collins@bdo.co.uk
ATOL applications
Tour Operator Margin Scheme
Taxation
Industry regulation and compliance
Flotations, acquisitions and disposals
James Welch
james.d.welch@bdo.co.uk
Tax planning and compliance for the travel industry
Business continuity planning.
Corporate Finance
Stephen Bayfield
stephen.bayfield@bdo.co.uk
Business Restructuring
sarah rayment
sarah.rayment@bdo.co.uk
contact
For more details please contact:
Robert barnard
t: +44 (0)20 7893 2143
e: robert.barnard@bdo.co.uk
This publication has been carefully prepared, but it has been written in
general terms and should be seen as broad guidance only. The publication
cannot be relied upon to cover specific situations and you should not act,
or refrain from acting, upon the information contained therein without
obtaining specific professional advice. Please contact BDO LLP to discuss
these matters in the context of your particular circumstances. BDO LLP,
its partners, employees and agents do not accept or assume any liability
or duty of care for any loss arising from any action taken or not taken by
anyone in reliance on the information in this publication or for any decision
based on it.
BDO LLP, a UK limited liability partnership registered in England and Wales
under number OC305127, is a member of BDO International Limited, a UK
company limited by guarantee, and forms part of the international BDO
network of independent member firms. A list of members' names is open
to inspection at our registered office, 55 Baker Street, London W1U 7EU.
BDO LLP is authorised and regulated by the Financial Conduct Authority to
conduct investment business.
BDO is the brand name of the BDO network and for each of the BDO
Member Firms.
BDO Northern Ireland, a partnership formed in and under the laws of
Northern Ireland, is licensed to operate within the international BDO
network of independent member firms.
2014 BDO LLP. All rights reserved.
14-0291
www.bdo.co.uk

Hotel Britain 2014

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leisure and hospitality

Hotel britain 2014

uk hotel development trends

Value Added Services

2013 survey results

WINNERS AND LOSERS

SUMMARY OF FIVE YEAR PERFORMANCE

THE ROAD AHEAD

BDO LEISURE AND HOSPITALITY SERVICES

That said, London remains the growth engine. Despite a difficult

Broadly speaking, hotels have been one of the most resilient

Unsurprisingly, 2013 hotel investments in the UK surpassed all

At present the horizon looks brighter than it has for years.

the guide to the performance of hotels in the uk | hotel britain 2014

Economy and tourism

Table 1: UK Economic Indicators, 2011-2015f

Real GDP Growth (%)

CPI inflation (%)

Source: International Monetary Fund

Visitor numbers increase

Source: International Passenger Survey, ONS

Visit family or friends (VFF)

hotel britain 2014 | the guide to the performance of hotels in the uk

Table 2: Overseas visitors to the UK, by purpose of visit (thousands)

29,889 29,803 30,798 31,084 32,893

Source: International Passenger Survey, ONS

Figure 3 shows tourism expenditure within the UK over the last

2009 2010 2011 2012 2013

37.5 36.6 40.5 42.7 42.7

*Domestic visitors and spend presented as YTD Nov 13

Source: International Passenger Survey, ONS

the guide to the performance of hotels in the uk | hotel britain 2014

Figure 3: All UK Visitors expenditure 2009-2013

Domestic visitors (millions)

Inbound visitors (millions)

Inbound visitors spend (billions)

Gatwick too saw an increase in passengers, from 34.2 million to

hotel britain 2014 | the guide to the performance of hotels in the uk

Table 4: UK Passengers (in millions) 2009-2013

Total UK (inc London)

The outlook for tourism

the guide to the performance of hotels in the uk | hotel britain 2014

The average transaction value in 2013 was 50m, up 55.9% from

Average price per room ()

Average value per transaction ()

Source: BDO Research

Source: BDO Research

hotel britain 2014 | the guide to the performance of hotels in the uk

The return of portfolio transactions

Bank debts offloaded and IPOs rising

2013 saw the return of portfolio transactions. In addition to those

We may have seen the dawn of a new era of fundraising, as IPOs

Meanwhile the Lloyds Banking Group began to offload its owned

London calling say hello to the millionpound room

Source: BDO Research

Prospects for 2014

the guide to the performance of hotels in the uk | hotel britain 2014

UK hotel development trends

* Includes: Britannia, Jurys, Macdonald, WA Shearing, Millenium & Copthorne, Bespoke,

The largest supply of group owned hotels (31.4%) is within the

12 hotel britain 2014 | the guide to the performance of hotels in the uk

Figure 6: UK hotel supply by segment, group owned vs independent owned 2013

Figure 7: Number of new added rooms 2009-2013

Branded Budget Hotels