Edinburgh named top spot for UK hotel investment

Edinburgh is still the top location for hotel investment in the UK, with Belfast coming second and Inverness third, according to a recent report.

 

The Scottish capital ranked highly in the 2024 Colliers International UK Hotel Market Index (UKHMI) due to its strong performance in both occupancy and ADR during 2023, as well as its continued RevPAR (revenue per available room) growth since 2019.

 

Red Carnation Hotels’ 100 Princes Street opened in Edinburgh earlier this month, while last year saw the launch of the UK’s second and Edinburgh’s only W Hotel after seven years in development.

 

The report added the “increasingly strong appeal” for Scotland and its favourable build and land costs resulted in four Scottish destinations making the top 10 (see below for the full list).

 

It comes after Highland Coast Hotels acquired Lochardil House, its first site in Inverness, earlier this year, followed by the Singapore-based Buxani group securing the 134-bedroom Highland Hotel.

 

In contrast, London has slipped down two places and is now ranked seventh due to high land prices and limited RevPAR growth compared to pre-pandemic levels. However, London recorded the highest ADR (average daily rate), with figures rising from £183 last year to £196.

 

Bath also dropped seven places to rank 10th, in line with other staycation-heavy destinations, such as Plymouth, Bournemouth and Brighton, which lost positions within the Index as a result of the decline in domestic travel.

 

Meanwhile, Derby has risen 12 places to secure first place in the rising markets index, followed closely by Newcastle, Gloucester, Stratford Upon Avon and Manchester.

 

Marc Finney, head of hotels, resorts and consulting at Colliers, said: “The data in our third annual report reveals the ever-evolving nature of the UK hotels market. Our Index is formulated in such a way that high land and construction costs and sluggish hotel market growth are penalised. That’s why some markets will rank lower than expected.

 

“Of course, this is a general market index and site-specific factors, and market conditions will lead to significant variances. What has been interesting to note this year has been the shift back to the city break as opposed to the countryside staycations which were popular during the pandemic. We’ve seen Manchester and Liverpool climbing back up the ranks in our latest analysis.”

 

Yvan Gravier, consultant at Colliers’ Hotel Advisory Services team, added: “In 2024, we anticipate that the shift away from staycations will contribute to softening performance in local leisure-dependent markets like Plymouth or Cardiff, while the full return of Asian and particularly Chinese travellers is expected to bolster internationally driven destinations such as York or Belfast.

 

“However, geopolitical tensions and potential conflicts in regions like the Middle East may pose uncertainties on international tourism, though growth is anticipated from middle-class travellers in Europe and North America, as well as affluent consumers in emerging economies like India.”

 

The UKHMI combines 10 performance indicators, such as GDP per capita, land site price and room occupancy, for 35 cities in the UK into a single ranking.

 

The top 10 markets in the 2024 Colliers’ UKHMI are listed below:

1. Edinburgh
2. Belfast
3. Inverness
4. York
5. Oxford
6. Manchester
7. London
8. Glasgow
9. Liverpool
10. Bath