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Dominvs Group sells three UK hotels off guide price of £12m

The Discount Holidays © Holiday Inn Darlington, Discount Holidays © Holiday Inn Dumfries and the Mercure Sheffield Parkway were all sold in an off-market deal with joint agents, global investors JLL and property specialists Christie + Co. The group comprises 229 guest bedrooms, with the Sheffield and Darlington properties sold freehold, and Dumfries as a long leasehold. The move forms part of Dominvs wider strategy to grow their established portfolio and development pipeline, the group said, while Christie + Co suggested the sale was evidence of the continuing appeal of the UK regional hotel market to overseas investors, thanks in part to a fall in the Pound Sterling.

Gavin Wright, director of JLL s hotels and hospitality group, said: This is a significant deal post the EU referendum result. All three hotels benefit from being operated by well-known brands and offer stable and steady income. Jeremy Jones, head of hotels brokerage at Christie & Co, said: This portfolio sale follows on from a number of recent high profile sales processes.

It is further evidence of the appetite from both domestic and overseas buyers for good quality regional UK hotel assets.

Rising payroll costs squeeze UK hotel profits

The study, Benchmarking Beyond RevPAR, which polled a consistent sample of nearly 45,000 hotel bedrooms across the UK over 15 years, revealed that payroll costs now make up almost a third of a regional hotel s cost base. In the last 15 years payroll costs in regional hotels rose by an average of 26 per cent while profit per available room fell 26 per cent – from 41.67 in 2000 to 30.49 in 2015. The 80 per cent increase in the National Minimum Wage during that period is said to be main driver of increasing staff costs.

While profit has already taken a notable drop, the gulf between pay and profit is expected to widen further this year with the introduction of the National Living Wage in April and prospective annual increases, said HotStats.

Challenge

The hospitality intelligence firm predicts that managing payroll levels will remain a challenge for UK hoteliers as the number of hotel staff employed on minimum wage contracts in the UK is projected to increase to 40 per cent by 2020. HotStats CEO Pablo Alonso said the findings went some way to explaining the growth within the budget hotel and serviced apartment sectors.

It is not hard to understand the acceleration in the development of limited-service hotels when it is the service which is now the biggest cost of a hotel operation,” he said. Alonso said hoteliers should prepare for a further squeeze following Britain’s vote to leave the EU.

According to law firm Simpson Millar, businesses wanting to hire staff from outside the UK after Britain leaves the EU could face a bill of almost 3,000 per employee.

The ability of UK hoteliers to manage payroll levels could be further tested if the fall out from Brexit triggers a significant policy change regarding immigration to the UK,” he said.

Post-Brexit to boost UK hotel room bookings by 30 per cent

New research released today from travel wholesaler Tourico Holidays shows that it is anticipating a significant boost in bookings thanks to Brexit for the rest of the year, in addition to the almost 250,000 UK room nights it has sold so far this year, including a 12 per cent year-on-year boost from the United States. This is thanks to the referendum s prompting of a weak pound and a subsequent good exchange rate into Sterling for overseas currencies, the data suggests. While Tourico Holidays states that its bookings from China and Germany account for just four and six per cent of inbound business respectively, both have reportedly increased their average daily reservations by over 100 per cent since the Brexit vote.

Bookings to secondary markets , such as Manchester, have also increased by a significant 60 per cent, with business coming not just from inbound visitors, but also UK visitors who would like to take a break without exchanging currency on the currently weak rate. The figures come soon after industry predictions1 that the hotel industry would be one of the first to benefit from Brexit. Mark Redmond, vice president of the European Region for Tourico Holidays, said: Early booking trends since Brexit show a falling Pound is actually strengthening the UK travel market.

Not only will international travellers see it as an opportunity to finally book a trip to what was formerly considered a high-priced destination, we anticipate British travellers will also travel more within the UK. The company currently has partnerships with over 1,000 UK hotels, including Park Plaza Hotels, Corus Hotel Hyde Park London, and Hilton Hotel Group including Double Tree hotels and the Conrad St. James.

References

  1. ^ industry predictions (www.bighospitality.co.uk)

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