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Deloitte European Hotel Industry Survey 2020: Two-thirds of hospitality leaders remain optimistic on long-term future of UK hotel market

11 November 2020

Key findings:

  • Cambridge climbs to top spot of most attractive UK city for hotel investment in 2021, with Oxford and Edinburgh ranking second and third, respectively.
  • Amsterdam remains the most attractive European city for hotel investment in 2021, followed by London and Paris.
  • Over two-thirds of respondents are ‘strongly’ or ‘slightly’ optimistic about the long-term future of the UK hotel market, with the majority also predicting a rise in profitability over the next five years.
  • Compared to 2020 levels, over a quarter of respondents expect Revenue per Available Room (REVPAR) growth to be greater than 9% in London in 2021, with 21% expecting the same RevPAR growth for UK regions over the same period.
  • However, half of the respondents believe that a ‘No Deal Brexit’ will lower the attractiveness of London for hotel investment.
  • More than half of respondents believe the UK investment cycle will take more than two years for performance to normalise.
  • Private equity is expected to be the largest source of equity capital for UK hotel acquisition in 2021, up +35 percentage points year-on-year.
  • Domestic and North American investors are expected to be the primary sources of investment this year.
  • Serviced apartments overtook hotels to become the most attractive asset class to invest in Europe, jumping +25 percentage points, year-on-year.


Andreas Scriven, head of hospitality and leisure at Deloitte:

“The hotel industry has been one of the hardest hit by the outbreak of COVID-19. However, as vaccination developments look increasingly promising and consumers think ahead to 2021 travels, senior hospitality figures are more optimistic about the year ahead. Indeed, many expect profitability to rise between now and 2025.

“The restrictions on international travel this summer saw many UK consumers switch their holiday plans to domestic staycations. UK destinations also remain attractive for hotel investment, with Cambridge overtaking Edinburgh to the top spot this year, the latter moving to third place behind Oxford.”

Nikola Reid, director and head of UK hospitality advisory at Deloitte:

“Across Europe, hotel investors continue to look for opportunities in Amsterdam which retains its place as the most attractive European city for investment for the fifth year in a row.

“Second to Amsterdam is London but, as the Brexit transition deadline approaches, investors indicate some caution. For half of this year’s respondents, a ‘No Deal’ Brexit scenario would lower London’s attractiveness for hotel investment.

“Combined with the challenges that COVID-19 has presented this year, boosting consumer confidence to once again pack their suitcase will be key to a speedy recovery of the hotel industry, and ensure long-term projected investment is realised.”

End

Notes to editors





About the research:

Deloitte’s European Hotel Industry Survey 2020 is based on responses from 114 senior hospitality figures from across the world, including owners, lenders, developers and investors. Respondents answered a series of questions on the European hotel investment market to ascertain their views of key trends and how these will shape the industry in 2020 and beyond. The survey was closed on Thursday 1st October.

More information about the European Hotel Industry Conference can be found here.

About Deloitte
In this press release references to “Deloitte” are references to one or more of Deloitte Touche Tohmatsu Limited (“DTTL”) a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity.

Please see deloitte.com/about for a detailed description of the legal structure of DTTL and its member firms.

Deloitte LLP is a subsidiary of Deloitte NSE LLP, which is a member firm of DTTL, and is among the UK's leading professional services firms.

The information contained in this press release is correct at the time of going to press.

For more information, please visit www.deloitte.co.uk

Member of Deloitte Touche Tohmatsu Limited

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