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In the May 2008 Issue of Property Investor News
The Hotel Sector
A decade ago the hotel sector was a neglected and little understood and niche of the commercial property market. But in the intervening period a new found dynamism has attracted the attention of private equity companies, wealthy investors and Sovereign Funds.
"For the first time in many years, we are seeing true innovation in the industry with the introduction of new hotel concepts", says Robert Barnard of PKF, the hotel consultancy. "Product differentiation is increasing, with new brands ranging from "luxury budget", to functional and very affordable products".
For its part PKF highlights both the explosive growth in the budget sector and the growth in the luxury segment. This is also set to expand with a new supply of both four and five-star hotels - in London, Edinburgh and Glasgow - scheduled mainly for 2008/09.
And Melvin Gold, a UK hotel consultant, expects the budget sector to double in size over the next two decades. And the fastest growth - at 10% per annum - will be in next five years. By 2027, he says in a report prepared for Travelodge, the budget sector will account for 27% of the hotel market from 12% today.
But there will be losers. The budget sectors growth will be at the expense of substandard independent hotels as well as the bed-and-breakfast sector. "These will likely be converted to residential or commercial properties", says PKF.
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