While 2018 can be referred to as the year of the CVA, 2019 was undoubtedly the year of Brexit.
The dreaded Brexit decision date loomed large for much of 2019, only to be changed at the last moment to January 31st. While this change helped retail secure a positive Christmas trading period, there remains significant damage to the retail industry as a result of a deadly concoction of Brexit, high-rents and low consumer confidence.
Despite the uncertainty surrounding the outcomes of the decision hurting several industries throughout the country, the hospitality sector has thrived, proving itself to be one of the most resilient industries the UK has to offer.
Benefitting from a mixture of increased ‘staycationers’ as well as an influx of foreign tourists capitalising on the volatile exchange rates, the UK’s hospitality sector has shone where others have failed.
One consultancy that is uniquely placed to benefit from the resilient hospitality sector is the national property consultancy, Bruton Knowles – specialists in commercial property and the hospitality sector.
Originally founded in Gloucestershire in 1892, the firm today operates 13 offices across the UK. Following the opening of its London branch in August last year, Commercial People caught up with the London office head, Senior Associate, Kimberley Turner (pictured right), to get her views on the health, growth and future of the sector, and to learn more about the reasons for Bruton Knowles’ South-East expansion.
This interview originally took place in September 2019 – projections made may not reflect current market.
Commercial People: Thank you, Kimberley, for taking the time to give us an interview – can you start by giving us a brief introduction of your background and why you joined Bruton Knowles
Kimberley Turner: Sure, I have been working in the sector since 2012, previously focusing on a range of markets including the medical sector, to later on the hospitality and hotel sectors.
I was attracted to Bruton Knowles by the amazing opportunity and chance to build a London team while still doing special market (valuation) work.
CP: Brilliant, so what are the growth plans for Bruton Knowles’ London team?
KT: I personally work on the special markets and valuation sector, and the [London] team are currently growing, and at present, we are in the process of recruiting more team members.
CP: What were the reasons for opening a London office?
KT: While we have always been well represented across the regions (of London and the South East), as well as having a base in London to meet clients, we decided to set up a fully dedicated office in the capital as a direct response to the messages from many of our London-based clients.
Many of our clients including the likes of big infrastructure companies such as National Grid, National Rail and Thames Water, asked us to be present in London so that they could work with us more closely and develop our professional relationship further.
CP: How has the London hospitality sector performed in recent years?
KT: The London hospitality market has been very resilient during a few years of economic difficulty and demand has remained strong both from domestic and intentional players in the market.
In general, the hospitality sector has mainly been driven positively by Brexit as the weakness of the Pound has encouraged many overseas investors and buyers, as well as enhancing tourist trade across the capital and the surrounding regions as well. In addition to the tourist boost, there has been a rise in the number of staycationers which has positively impacted the market.
CP: In light of increased visits from both locals and the tourist market, how has this affected overall occupancy rates?
KT: Operationally the sector has seen positive growth, while this year has been [a] slightly slower pace in terms of growth, there is still growth in terms of occupancy, along with the average daily rate.
2018 marked the 9th consecutive year of RevPAR (revenue per available room) growth and strong growth is still projected for this year despite 2019’s slower [growth]figures.
Generally speaking, the market has been positively impacted over the last few years, even through the veil of political and economic unrest.
Transactional volume meanwhile in the UK hotel market still remains quite attractive to overseas buyers and visitors from overseas visitors; although there has been a slow in the market mainly due to the lack of supply of high-quality assets, supply rather than the lack of interest from investors.
CP: What do you believe are the reasons behind the low stock in the hospitality sector?
KT: Market uncertainty in 2019 has made owners more reluctant [to sale/trade]. With several questions surrounding Brexit, many owners have been waiting until a decision has been made on Brexit before investing heavily into the sector.
However, at present, hotel owners and investors are currently benefiting from strong operational trade on the back of the Brexit talk, and are making good money thanks to the tourist boom – as such, they can afford to wait for a decision to be made before selling.
CP: What is the main appeal of the London hospitality sector that attracts international buyers?
KT: I believe London will continue to be one of the top cities in the world for tourism (regardless of Brexit) and the lower value of the Pound has made it easier for foreign investors to enter the market. In 2018 alone, nearly 50% of sales were made by overseas investors, for example.
CP: Are foreign investors also targeting other cities?
KT: We have seen it [foreign investment] spilling out to other regions and gateway cities such as Liverpool, Manchester and Edinburgh, where investors feel that they can get even more for their money as London has become very expensive due to a number of factors, including a mix of a lack of supply and the heightened demand.