The proportion of new-build hotels in the UK has soared by 37%, accounting for 66% of all new hotel rooms in 2017, according to new data.
Knight Frank’s UK Hotel Development Opportunities report showed 15,200 new hotel rooms were opened in 2017 – a 2.4% rise in the total number of hotel rooms in the UK.
It forecasts 21,000 new rooms will open in 2018, representing a further 3.3% growth.
The budget hotel sector continues to dominate the market, making up 69% of all new-build hotel stock and 65% of all hotel extensions. Around 8,300 new branded budget hotel rooms are expected to open in 2018.
The branded budget sector is expected to continue to grow its market share, accounting for more than 25% of the UK hotel supply, while new supply in the four-star sector will maintain a 29% share.
Serviced apartments are expected to see 10% annual growth, amounting to a 3.5% share of the market.
Unprecedented levels of development
Geographically, Inverness, Brighton, Edinburgh, Cardiff and Liverpool were identified as the five most attractive cities for hotel investment and development, while London and Manchester have both fallen out of this year’s top 10 locations.
Around 13,000 new rooms in 2018 will be delivered in regional markets, representing 62% of the total UK new bedroom stock for 2018.
London posted a 70% leap in new-build hotel openings, with more than 4,100 new rooms.
This growth was fuelled by a strong rise in budget hotel rooms in the capital, accounting for 67% of all new-build bedroom stock.
In 2017, total new bedroom supply in London increased by 4%. Growth is forecast to rise of more than 5%.
Julian Evans, head of hotels, healthcare and leisure at Knight Frank, said: “The UK is currently experiencing an unprecedented level of development activity, with the staggering figure of over 5,200 new hotel rooms opening during the first six months of 2018 and a further 15,000 rooms forecast to open later this year.
“This is great news for the industry, as growing demand is reflected in development hotspots regionally, while London continues to see an increase in new rooms, demonstrating there are compelling opportunities for investors across the country.”
Charles Fletcher, specialist property investment partner at Knight Frank, added: “The robust demand for fixed lease hotel investments, combined with a lack of built stock available and suitable to lease, has led many investors to explore the development route via forward funding or forward commitment structures.
“In the branded budget hotel sector, we have seen a marked increase in the number of developers taking the opportunity to de-risk developments at an early stage in the development process as a result.”
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