Hotel Britain 2015

LEISURE AND HOSPITALITY HOTEL BRITAIN 2015 THE GUIDE TO THE PERFORMANCE OF HOTELS IN THE UK CONTENTS ECONOMY AND TOURISM 4 UK HOTEL TRANSACTIONS 10 UK HOTEL DEVELOPMENT TRENDS 14 2014 SURVEY RESULTS 20 WINNERS AND LOSERS 26 SUMMARY OF FIVE YEAR PERFORMANCE 29 THE ROAD AHEAD 34 COMPETITION 36 CLAIRVOYANT CORNER 38 SURVEY COVERAGE 40 BDO LEISURE AND HOSPITALITY SERVICES 42 THE GUIDE TO THE PERFORMANCE OF HOTELS IN THE UK | HOTEL BRITAIN 2015 2

FOREWORD

Go the regions!

As we write, global economic and geopolitical uncertainty is still with rooms yield for the year already surpassing the peak experienced upon us. The European Union continues to be plagued by a stagnating in 2007. economy and sovereign debt issues; developments in the Ukrainian- Russian conflict have greatly affected international relations and The health of the UK hotel sector is confirmed by the increase in consequently the economy of the Russian Federation; while, further transactional activity, which reached £6.1bn in 2014, the highest figure afield, the Chinese economy grew at one of the slowest rates for the since 2006. There has been a rush into regional transactions, where last 24 years in 2014. hotels have sold above the asking price last year.

However, despite the somewhat gloomy scenario, there is still some 2014 also cemented the importance of the budget segment. New light at the end of the tunnel. In 2014, the US economy grew by concepts and a modernisation of the offer are underway, with a strong 2.2-2.4% and is forecast to rise above 3% in 2015, the strongest pipeline for the sector at about 47% of the total planned new supply. economic growth in a decade for the country. But it is the UK that Nevertheless, the outlook still remains unclear, especially as the experienced the strongest rate of growth amongst all developed general election in May could cast doubts in the short term, and countries, up 2.8% on the previous year. This was driven by strong the strength of the pound might affect inbound visitors. However, consumer spending. The drop in the oil price kept inflation at a record as already mentioned, the future of the hotel market is expected to low, and boosted both consumer and business confidence, resulting in continue on its upward path. The Rugby World Cup will showcase reduced unemployment and wage growth. the UK abroad and should positively affect hotel performance for As a result of this overall economic optimism, hotels in the UK the current year. Furthermore, international visitors are expected to experienced a stellar 2014. Bucking the trend of last year, regional continue to increase in 2015, reaching 35m, boding well for future hotels outperformed their London counterparts. Rooms yield for hotel performance. hotels in the regions experienced double digit growth. As demand for hotels remained strong, hoteliers succeeded in pushing AARR up, and resulting in regional hotels experiencing a higher compound annual growth rate over the last five years when compared to the capital.

However, London hotels did not stand still. Despite the significant 4% increase in supply, occupancy remained robust, confirming the importance of the hotel sector in the capital, where hotel’s occupancy ROBERT BARNARD is one of the highest across Europe. In the capital, AARR continued Partner to grow, albeit modestly and at a varying speed within different Leisure and Hospitality Services segments. Overall, London hotels continued to post growth in 2014, [email protected]

THE GUIDE TO THE PERFORMANCE OF HOTELS IN THE UK | HOTEL BRITAIN 2015 4

ECONOMY AND TOURISM

In 2014, the UK economy grew at a faster signs of confidence in the economy and the number of vacancies at a 14 year high. Unemployment is forecast to continue declining further rate than any other major advanced during 2015, albeit at a slower pace. economy and recorded its best performance Notwithstanding the reported good figures, further struggles to grow since 2007. in the Eurozone and uncertainty surrounding the imminent election could compromise recovery and a return to strong growth. The IMF estimates growth for the full year to be at 3.21%, however recent reports suggest that this momentum is now running out of steam, as the Office for National Statistics (ONS) claimed growth TABLE 1: UK economic indicators, 2012-2016f for 2014 was at 2.8%. Growth has primarily been attributable to the services sector, but forecasters believe that the recent fall in oil prices 2012 2013 2014f 2015f 2016f will help to fuel growth in the manufacturing sector. The IMF has forecast a slowdown of growth to less than 3% over the coming years. Real GDP Growth (%) 0.28 1.74 3.21 2.71 2.44

CPI inflation remains below the Bank of England’s target of 2%, falling CPI inflation (%) 2.82 2.56 1.63 1.80 2.00 to 0.0% in February 2015. Tumbling energy prices, and the strength of Current account deficit the pound have been the main causes for this, and forecasters believe -3.83 -4.51 -4.22 -3.77 -3.30 that this could turn negative in the short to medium term. However, (% GDP) Government gross debt this is generally good news for the UK economy, as it should fuel 89.06 90.58 91.98 93.11 92.92 household spending which is an important driver. Inflation is expected (% GDP) to rebound by the end of the year as these effects are absorbed. The Unemployment (%) 7.95 7.60 6.35 5.78 5.47 current account deficit stood at -4.22% of GDP. This figure highlights that with relatively stronger household spending the UK is becoming even more dependent on foreign capital. SOURCE: International Monetary Fund, October 2014 fforecast The UK government’s gross debt increased slightly in 2014 to 91.89% of total GDP. According to the ONS, general government gross debt stood at £1,457.2bn at the end of November 2014, an increase of VISITOR NUMBERS INCREASE £89.7bn when compared with the previous year. International visitor numbers grew for the fourth consecutive year in 2014. Visitors increased by 5.8% to 34.8m, an all time high. Overall, The labour market continues to show positive signs of recovery with the holiday segment remained the main driver of growth, up 7.7%, the ONS reporting 30.9m people in work at the end of 2014. Between accounting for almost two-fifths of the total. However, results are October and December 2014, the rate of unemployment fell to 5.7% still provisional and there is speculation that the total inbound visitor (1.91m), the lowest level for six years. This was as a result of increasing numbers will surpass the 35m mark during the current year. 5 HOTEL BRITAIN 2015 | THE GUIDE TO THE PERFORMANCE OF HOTELS IN THE UK

TABLE 2: Overseas visitors to the UK, by purpose of visit (thousands)

2010 2011 2012 2013 2014 2014 % change 2014 market share

Holiday 11,668 12,008 11,961 12,781 13,760 7.7% 39.5%

Business 6,793 7,238 7,422 7,931 8,370 5.5% 24.1%

Visit friends or family (VFF) 8,408 8,841 8,948 9,369 9,840 5.0% 28.3%

Miscellaneous 2,935 2,710 2,752 2,812 2,830 0.6% 8.1%

All visits 29,803 30,798 31,084 32,893 34,800

Year-on-year growth -6.5% 3.3% 0.9% 5.8% 5.8%

SOURCE: VisitBritain Monthly Update: December 2014 2014 figures are provisional

Europe continues to be the main inbound market for the UK, FIGURE 1: Overseas visitors to UK, by source market 2013-2014 accounting for about three-quarters of the total, or 25.8m. North American visits for 2014 were up 4% to 3.7m. However, the segment 3,500 has slowed its pace of growth, mainly due to the 11% drop in visits from Canada. 3,000

Figure 1 shows the seasonality of inbound visits to the UK. Total visits 2,500 peaked during the month of June 2014, surpassing the 3m mark, up 13.6% on the same month the previous year. This was as a result of 2,000 the increase in visits from Europe, while the North American market remained flat (-0.5%) and the rest of the world declined marginally by 1,500 1% to 444,000.

Visitors (in thousands) 1,000 Overall January and March were the lowest performing months for inbound visits over the last two years, with the summer months 500 generally welcoming more visitors to the UK.

0 Jul-13 Jul-14 Jan-13 Jan-14 Jun-13 Jun-14 Apr-13 Feb-13 Apr-14 Feb-14 Sep-13 Sep-14 Dec-12 Oct-13 Dec-13 Oct-14 Dec-14 Aug-13 Mar-13 Aug-14 Mar-14 Nov-13 Nov-14 May-13 May-14

All visits Europe Other countries North America

SOURCE: International Passenger Survey, ONS THE GUIDE TO THE PERFORMANCE OF HOTELS IN THE UK | HOTEL BRITAIN 2015 6

Figure 2 shows the year-on-year percentage change for selected TABLE 3: Domestic tourism by purpose of visit (YTD October) inbound markets to the UK during 2014. We note that visits from Southern Europe grew very strongly last year, with visits from Greece 2013-2014 experiencing a second consecutive year of growth. Singapore (+24%) 2010 2011 2012 2013 2014 % change and Saudi Arabia (+29%) also grew considerably, with both countries Holiday 50.2 53.0 51.2 50.8 47.7 -6.1% reversing a negative trend experienced in 2013. Conversely, visits from Mexico (-15%) and China (-7%) declined during 2014 in contrast to the strong growth experienced during the previous year. Business 13.5 15.4 15.4 15.1 13.9 -8.0% Visit friends or Figure 3 shows a comparison between inbound and domestic visits 33.8 35.9 33.5 34.0 32.5 -4.5% family (VFF) and spending to the UK. However, domestic visitor numbers for the full year were not available at the time of writing. Inbound visitor Miscellaneous 2.8 3.4 3.5 3.5 2.6 -26.2% expenditure in 2014 mirrored the increase in visits. Expenditure was up 3.5% to £21.7bn. Domestic visitors for the year to date to October All visits 100.4 107.6 103.6 103.5 96.7 2014 were down -6.5% to 96.7m when compared to the previous Year-on-year year. Domestic expenditure was also down, albeit to a lesser extent 7.2% -3.8% -0.1% -6.6% (-2.5% to £19.6bn). We note that, generally speaking, November is a growth strong month for corporate activity, and December sees a lot of visits to family and friends during the Christmas period, which could result SOURCE: ONS, Overseas Travel and Tourism; Great Britain Tourism Survey October in different figures for the full year. 2014, Great Britain Tourism Survey 2013

FIGURE 2: Percentage change in visits from selected countries FIGURE 3: All UK visitors expenditure 2010-2014

40 140 30 35% 120 29% 25 30 28% 27% 24% 100 21% 20 20 80 12% 15 10 60 Spend (£billions) Visitors (millions) 10 40 Saudi Arabia New Zealand Brazil Portugal Turkey Greece Singapore 0 20 5 China Mexico Nigeria -7% Canada -10 -11% 0 0 -13% 2010 2011 2012 2013 2014 -15% Domestic visitors (millions) Domestic visitors (millions) -20 Inbound visitors (millions) Inbound visitors (millions)

SOURCE: VisitBritain, Monthy Inbound Update: December 2014 (2014 figures are provisional) SOURCE: ONS, Overseas Travel and Tourism; Great Britain Tourism Survey October 2014, Great Britain Tourism Survey 2013 (Domestic figures as per October 2014) 7 HOTEL BRITAIN 2015 | THE GUIDE TO THE PERFORMANCE OF HOTELS IN THE UK

PASSENGER NUMBERS According to the UK Civil Aviation Authority (CAA), UK airports experienced another year of strong growth with passenger numbers up 4.4% to 238.4m in 2014, the fourth year of growth. The growth in passengers was distributed fairly evenly between London (up 4.9% to 145.5m) and regional UK (up 3.5% to 92.8m).

Excluding London airports, England was the best performing region for passenger traffic, up 4% to 60.8m. However, Scotland experienced the best compound of annual growth rate (CAGR) (2.9%), with strong growth reported by both Glasgow and Edinburgh. Edinburgh Airport surpassed the 10m mark, thanks to the addition of new long haul routes. The Barclays Tourist Dynamic Report also predicts that visitors to Scotland will increase by 40% by 2017, boding well for future tourism performance.

In Wales, Cardiff International Airport saw a -3.8% decline in passenger numbers to 1m. On the other hand, the flat performance for Northern Ireland airports is likely to reverse in 2015, with the introduction of seasonal Virgin Atlantic flights from Belfast during the summer.

Stansted was the only London airport to experience double digit growth in 2014, up 11.7% to 19.9m passengers. The airport now serves more than 170 destinations worldwide and it is linked to more EU destinations than any other UK airport. Acquired by the Manchester Airport Group in 2013, the airport has been under redevelopment with further talks at government levels for improved rail connections to the Essex hub.

Southend Airport also experienced strong growth in 2014, with a 13.6% increase in passenger numbers to 1.1m. The airport saw Flybe adding six new routes in the year, and also easyJet strengthening its presence at the airport.

Prestwick Airport saw a 20.3% decline in passenger numbers to 912,000 in 2014. After been purchased by the Scottish Government for one pound, the airport saw Ryanair moving some flights to Glasgow International. At present there are discussions about the possibility of the airport been made into the first UK spaceport.

Cambridge was the top performing airport for year on year growth in 2014, up a staggering 123.4% to 21,000 passengers. This was the result of Cityjet running summer flights to Dublin and Amsterdam. However, these air links were cancelled in the autumn and despite a £17m deal to upgrade its runway, the airport continues to suffer from the impact of strong seasonality. THE GUIDE TO THE PERFORMANCE OF HOTELS IN THE UK | HOTEL BRITAIN 2015 8

TABLE 4: UK passengers (in millions) 2010-2014

CAGR (%) 2010 2011 2012 2013 2014* % change 2010-2014 AIRPORT Heathrow 65.7 69.4 70.0 72.3 73.4 1.4% 2.2% Gatwick 31.3 33.6 34.2 35.4 38.1 7.5% 4.0% London City 2.7 3.0 3.0 3.4 3.6 7.7% 6.2% Luton 8.7 9.5 9.6 9.7 10.5 8.2% 3.7% Stansted 18.5 18.0 17.5 17.8 19.9 11.7% 1.5% Total London 127.4 133.6 134.3 138.7 145.5 4.9% 2.7% Edinburgh 8.5 9.4 9.2 9.8 10.2 3.8% 3.6% Glasgow 6.5 6.9 7.2 7.4 7.7 4.6% 3.3% Birmingham 8.5 8.6 8.9 9.1 9.7 6.3% 2.7% Manchester 17.8 18.8 19.7 20.7 22.0 6.1% 4.3% Other UK 42.3 42.0 41.4 42.8 43.3 1.2% 0.4% England 54.2 55.5 56.2 58.4 60.8 4.0% 2.3% Scotland 20.8 22.1 22.2 23.3 24.1 3.5% 2.9% Wales 1.4 1.2 1.0 1.1 1.0 -3.8% -6.2% Northern Ireland 7.1 6.9 7.0 6.9 6.9 -0.1% -0.4% Total UK (inc London) 211.2 219.3 220.6 228.4 238.4 4.4% 2.5%

SOURCE: UK Civil Aviation Authority. *2014 figures are estimates

THE OUTLOOK FOR TOURISM VisitBritain predicts that there will be a 2.5% growth in international tourist arrivals to 35.1m in 2015. Expenditure is also forecast to grow by 4.5%, or £1bn in cash terms, to £22bn. This will be a new record for the tourism industry.

However, there are still some risks associated due to global economic and geo-political instability. The ongoing economic stagnation in the European Union, as well as recent discussions for the renegotiation of Greek sovereign debt might affect visitation from Europe to the UK. This is also likely to be affected by the strong pound, recently at a seven year high. However, with Airport Passenger Duty for children under twelve being abolished in May, and together with the recent drop in oil prices, this could positively affect discretionary income with families being able to afford more travel.

THE GUIDE TO THE PERFORMANCE OF HOTELS IN THE UK | HOTEL BRITAIN 2015 10

UK HOTEL TRANSACTIONS

The UK hotel transaction market continued Notable single transactions for the year include the 200 bedroom Harrington Hall Hotel in London, bought for £89m by Middle in an upward direction, building on the gains Eastern investors; the 50% stake acquisition of The Savoy Hotel made in 2013. JLL reported that in 2014 the sold by Lloyds Banking Group; the acquisition of the Grand Hotel Brighton by a company owned by Galen & Hilary Weston; and the total of commercial real estate investment in acquisition of the Turnberry Resort in Scotland sold by Leisurecorp to the UK amounted to £65bn. The Trump Organisation for an estimated £35.7m.

This was 3% higher than the 2006 peak, as well as 13% higher The average transaction value in 2014 was £66m, up 30.6% from than the 2013 figure. During the same year, hotel deals accounted the previous year. This was mainly attributed to the improved for about 10% of the total, with Savills reporting that the total UK economic conditions which continued to boost investor transaction value for UK hotels in 2014 was £6.1bn, the highest since confidence. Secondly, 2014 experienced less portfolio transactions 2006. when compared to the previous year, with only one-third of all transactions being multiple asset deals. This is also reflected in the Our predictions in the 2014 issue of Hotel Britain proved correct. In average price per key, which increased by 5.3% to £169,085 in 2014 2014, the majority of transactions, i.e. about two-thirds of the total, when compared to the previous year. were of single assets. Last year we also predicted notable activity in the midscale/ budget end of the market. This was evidenced by Kew However, despite the increase in the overall value of transactions, Green buying 25 Holiday Inn hotels in four different transactions, the price per room did not increase significantly due to the high as well as the sale of 144 Travelodges bought by a consortium of amount of mid- and lower-scale hotel transactions, as well as Avenue Capital, Goldentree Asset Management and Goldman Sachs investors moving out of primary locations to seek better value for for an estimated £520m. In addition, Lone Star and Somerston money. Capital bought twelve Holiday Inn Express hotels across the UK.

FIGURE 4: Average value of transaction FIGURE 5: Average price per room in UK hotel transactions

80 £350,000 £319,316

70 66.763 65.968 £300,000

60 54.700 £250,000 50.521 £216,525 50 £197,967 £200,000 £169,085 40 £160,563 £149,045 32.403 £150,000 30

Average price per room (£m) £100,000 20 14.902 Average value per transaction (£m) £50,000 10

0 0 2009 2010 2011 2012 2013 2014 2009 2010 2011 2012 2013 2014

SOURCE: BDO research SOURCE: BDO research 11 HOTEL BRITAIN 2015 | THE GUIDE TO THE PERFORMANCE OF HOTELS IN THE UK

INVESTMENT TRANSACTIONS ARE ABOVE ASKING LONDON HOTEL PRICES STABILISE, REGIONAL HOTELS PRICES PRICES PICK UP Despite seeking good value for money deals, investors were ready to Table 5 shows the comparison of price per room for transactions pay above the asking price to secure assets. An example of this was in London and the regions in 2014. It is interesting to note that the the KSL acquisition of the De Vere Village Urban Resorts portfolio for average price per room in regional UK was up by 30% when compared a reported £480m, 6% above the asking price. to the previous year. The median price was also up by about 14%.

Kew Green is also reported to have paid £30m above the price tag However, as no hotel in London surpassed the £1m price per room tag, for a deal including 19 Holiday Inn Hotels across UK. This represents the average prices for the capital declined by 10% to £337,774 when a staggering 42.8% above the asking price. compared to the previous year. We note that this was mirrored in the 8.8% decline in the highest price paid per room, which was for the The trend is likely to continue in 2015, with the Radisson Blu Royal Park City Hotel Kensington in December (£967,742). Mile Hotel in Edinburgh being sold for more than the £59m price tag. This is primarily the result of increased economic conditions and As mentioned earlier, London hotels saw more stable average prices a returning appetite for investments. in 2014 when compared to the previous year. The average price per room was £337,774 and this was despite an increase in the top end of the market hotel transactions. However, the highest price per room THE YEAR OF REGIONAL TRANSACTIONS paid in London in 2014 was below the £1m mark per room paid for JLL reported that overall the total commercial real estate investment the Parkes hotel in 2013. On the other hand, the lowest price per in the UK regions was up 70% in 2014 to a combined value of room paid in the capital was for the Travelodge Enfield, at £75,758, up £28bn. This is reflected in our study: about two-thirds of total hotel 13.6% when compared to the comparable transaction last year. transactions were carried out in the regions during 2014. Investors In the regions, the highest price per room was for the five-star Lowry continued to seek good investment opportunities in primary Hotel in Manchester, sold by Rocco Forte Hotels to Westmont regional locations. However, the market also started looking to Hospitality Group and Mount Kellett Capital Management for a total secondary locations. of £40m, or £272,727 per room. This compared to the Park Inn by Examples include the continued expansion of Topland in the regional Radisson Leigh which commanded a £18,519 price per room tag when market, with the company acquiring Hallmark Hotels in 2014 and purchased by Kro Hotels. The Feathers Group at the beginning of 2015. Starwood Capital also consolidated its presence by the acquisition of the Four Pillars hotel TABLE 5: Comparison of price per room for transactions in London and the regions 2014 portfolio. Price per room (£) Average (mean) Median Highest Lowest London 337,774 258,621 967,742 75,758 Regions 97,236 71,148 272,727 18,519 THE GUIDE TO THE PERFORMANCE OF HOTELS IN THE UK | HOTEL BRITAIN 2015 12

THE FUTURE – 2015

2015 is expected to see continuing robust trading activity. Early indicators of this are the divestment of the Moorfield Real Estate Funds, as well as KSL seeking a buyer for the Malmaison and Hotel du Vin portfolio and the sale of the Jurys Inn group to Lone Star.

The year ahead will continue to see an increase in lenders willing to offer finance as their appetite for investment returns due to the improved overall economic conditions. There is also the possibility of an increase in sales of assets to crystallise profits from properties acquired during or shortly after the economic downturn.

Overall, there is still pressure on operating performance, with hotels needing to shore up their bottom lines in order to command premium prices during the sale process. 13 HOTEL BRITAIN 2015 | THE GUIDE TO THE PERFORMANCE OF HOTELS IN THE UK THE GUIDE TO THE PERFORMANCE OF HOTELS IN THE UK | HOTEL BRITAIN 2015 14

UK HOTEL DEVELOPMENT TRENDS

Table 6 analyses the 20 top hotel chains in TABLE 6: Top 20 UK hotel companies by room number the UK by room count and number of hotels Company Rooms Hotels % Rooms % Hotels in 2014. Whitbread, owner of the Premier Whitbread 52,786 659 19.7 27.5 Inn brand, remains the top company for both IHG 39,519 287 14.8 12.0 room count and hotel numbers, with IHG Travelodge 37,184 503 13.9 21.0 and Travelodge at second and third place Accor 26,915 204 10.1 8.5 respectively when looking at room count. Hilton 24,281 114 9.1 4.8 Marriott 11,526 61 4.3 2.5 A close look at the table shows how the budget hotel segment is Rezidor 9,348 46 3.5 1.9 prevalent in the UK: if combined together, Whitbread and Travelodge Britannia 8,941 48 3.3 2.0 account for over 48% of the total hotels within the top 20 companies. This was up a significant 12.5% from last year’s figures. GLH 8,279 36 3.1 1.5 Wyndham 7,835 92 2.9 3.8 A comparison with last year’s list also shows Starwood Capital and KSL entering the top 20 as a result of acquisitions carried out last year, Starwood Capital 7,641 51 2.9 2.1 with Starwood Capital buying the De Vere Group, and KSL buying the Jurys Inn 5,538 23 2.1 1.0 Malmaison and Hotel du Vin portfolio. KSL 4,993 53 1.9 2.2 We note the increase in properties and room count for both Britannia Macdonald 4,715 47 1.8 2.0 (up 9.9%) and QHotels (35.5%). The former has continued its QHotels 4,019 28 1.5 1.2 expansion programme started in 2012, with the addition of six WA Shearing 3,918 48 1.5 2.0 properties within its portfolio; while the latter has acquired six former Bespoke 3,753 65 1.4 2.7 De Vere Hotels and De Vere Luxury Lodges. Imperial London 3,389 7 1.3 0.3 We also note that Hilton was one of the few companies with a stable The Hotel Collection 2,856 21 1.1 0.9 proportion of hotel representation in the UK at 4.8%. Totals 267,436 2,393 100.0 100.0

SOURCE: HotelAnalyst: UK hotel brand listing 2014 15 HOTEL BRITAIN 2015 | THE GUIDE TO THE PERFORMANCE OF HOTELS IN THE UK

Figure 6 looks at the current and future supply by segment for 2014. LONDON IS STILL THE TOP DEVELOPMENT PROSPECT AM:PM classifies active supply as those projects with a confirmed Figure 7 shows the new room supply coming into the market during opening date within three years from now. As we can see from the 2014. figure, the budget segment accounts for over one-third of the total current bedroom supply, with three- and four-star hotels accounting London continues to experience high development activity, with for almost another third of the supply each. the same number of new rooms added in the capital (5,240) as in the other regions (5,288). After subdued activity in 2013, new hotel A closer analysis of the active supply bar gives food for thought. The bedroom supply in the capital increased by about 4% in 2014. figure shows that the majority of hotel development will take place in the budget segment (47% of the total new supply), reaffirming the In 2014, the total bedroom supply for regional hotels increased by strength of the segment. This is confirmed by the recent diversification 0.7% on the previous year. England and Scotland experienced strong of the budget hotel offering, as well as the strong development development activity in 2014, while Wales, Ireland and Northern pipeline of the top two companies. In 2015, Travelodge plans to open Ireland saw little development activity during 2014. Wales saw the 60- 15 hotels (or about 1,400 rooms), with Whitbread also having about room Premier Inn Haverfordwest as the only branded property opened 28 hotels under construction at present and about 5,500 rooms in 2014, while Northern Ireland saw the 16-room independent Hedges expected to come into existence during the current year. Hotel opening its doors last year.

We also note how the midmarket segment is experiencing a slowdown in development activity, with only 4% of the total of future supply FIGURE 7: Number of new rooms added in 2014 expected to be opened in this bracket. 6,000 It is also interesting to note how both five-star and apart-hotels are 5,240 experiencing strong development activity. Despite the difficulty of 5,000 classification for the sector, serviced apartments are increasingly expanding their presence. In regional UK, Savills reports that cities like 4,000 3,706 Birmingham and Aberdeen are experiencing a 60% increase in current supply, mainly driven by corporate demand. However, the adoption 3,000 of Clause 34 in the deregulation bill could marginally affect future development as it allows householders to let out their homes for less 2,000 than three months without seeking planning permission. 1,393 1,112 1,000 628 FIGURE 6: UK 2014 bedroom supply and active pipeline by segment 269 86 62 52 20 51 10 0 100 3% 10% London England Scotland Wales Ireland Northern 34% Ireland 47% New build Extensions 80

SOURCE: AM:PM 60 30%

40 4% 20.0% 26% 29%

13% 4% 0 Current supply Active supply

5-star 4-star 3-star Budget Apartments

SOURCE: AM:PM THE GUIDE TO THE PERFORMANCE OF HOTELS IN THE UK | HOTEL BRITAIN 2015 16

NEW TRENDS Tech and app friendly rooms Sharing economy Hotel rooms are increasingly becoming an extension of mobile phones The rise of the likes of Airbnb is likely to affect future demand and other technology. Following the introduction of i-Pads to control patterns for hotels. While the impact of such alternative forms of room temperature and lighting and mobile key technology, there is accommodation is not fully understood in the EU market, the reaction a clear demand for techno-savvy hotel rooms. Smart TV, interactive to this form of accommodation has varied. Barcelona has fined Airbnb tourism guides, and improved Wi-Fi connectivity are only some of the €30,000 as the company breached local tourism laws, while Berlin has new improvements introduced by hotels. The latest example is the claimed that the rise of the practice led to an increase in rental prices refurbishment of the Express by Holiday Inn concept which will be and has banned short term lettings. rolled out in Europe during the next three years.

However, Amsterdam has passed a law aimed to allow the short Continued interest in the budget segment term rentals in return for tax payments, while London’s proposal to Having driven strong growth in 2014, the budget segment has overturn a 40 year-old law banning short term rental has encountered reaffirmed its status as one of the most important segments for the opposition from its local authorities. industry. Recently new brands and concepts have entered the UK hotel market, and this is expected to continue even further as customers Emergence of new markets remain highly price conscious and seek good value for money deals. The emergence of travellers from other parts of the world will influence the offering and marketing of hotels across the globe, as widely demonstrated by hotels and hotel companies fully exploiting social media channels. 17 HOTEL BRITAIN 2015 | THE GUIDE TO THE PERFORMANCE OF HOTELS IN THE UK

PLANNED HOTEL OPENINGS 2015: A selection of planned hotel rooms openings in key cities

Aberdeen 540

Edinburgh 304 Glasgow 492

Newcastle 250

Middlesbrough 138

Manchester Liverpool 838 472

Chester 63

Birmingham 166

Brentford Southend London on Sea Bath 124 99 6,400 80 Heathrow 184

Southampton Exeter 259 120

Source: BDO Research and Hotelsdata THE GUIDE TO THE PERFORMANCE OF HOTELS IN THE UK | HOTEL BRITAIN 2015 18

LONDON (CIRCA 6,400) Birmingham Manchester Ibis Styles Birmingham NEC Gotham Hotel (opened April 2015) CitizenM: 2 hotels Company: Accor Company: Bespoke Hotels Company: CitizenM Rooms: 166 Rooms: 60 Rooms: 616 Chester Hotel Football (opened March 2015) Crowne Plaza Albert Embankment Roomzzz Aparthotel, Chester City Company: Gary Neville- Ryan Giggs/ GG Hospitality Company: Intercontinental Hotel Group Company: Roomzzz Rooms: 140 Rooms: 130 Rooms: 63 Innside Manchester Hilton London Bankside Edinburgh Company: Melia Hotels International Company: Splendid Hotel Group Mercure Edinburgh Quay Rooms: 208 Rooms: 292 Company: Accor King Street Townhouse Rooms: 110 Holiday Inn Express London Excel Company: Eclectic Hotels Company: Intercontinental Hotel Group Premier Inn and Hub by Premier Inn (2 hotels) Rooms: 40 Rooms: 204 Company: Whitbread Motel One Piccadilly Rooms: 294 InterContinental Hotel The 02 Company: Motel One hotels Company: Intercontinental Hotel Group Exeter Rooms: 330 Rooms: 453 Premier Inn Exeter Middlesbrough Company: Whitbread M by Montcalm Royal London Holiday Inn Express Rooms: 120 Company: Montcalm Hotels Company: Intercontinental Hotel Group Rooms: 269 Glasgow Rooms: 138 Apex Glasgow Premier Inn: 3 hotels (Premier Inn, Hub by Newcastle Company: Apex Hotels Premier Inn) Crowne Plaza Stephenson Quarter Rooms: 100 Company: Whitbread Company: Intercontinental Hotel Group Rooms: 358 Ibis Style Glasgow Rooms: 250 Company: Accor Roomzzz London Stratford Southampton Rooms: 101 Company: Roomzzz aparthotel Hilton at the Ageas Bowl, Southampton Rooms: 82 Travelodge Queen Street Company: Hilton Company: Scot Sheridan/ Travelodge Rooms: 175 Travelodge: 3 hotels Rooms: 171 Company: Travelodge Travelodge West Quay (opened March 2015) Rooms: 276 Villa Hotel Pacific Quay Company: Travelodge Company: De Vere Village Urban Resorts Rooms: 84 Z Hotels: 2 hotels Rooms: 120 Company: Z hotels Southend on Sea Rooms: 221 Heathrow Premier Inn Easter Esplanade (opened Mercure London Heathrow (opened March) March 2015) REGIONAL (CIRCA 9,400) Company: Accor Company: Whitbread Rooms: 184 Rooms: 80 Aberdeen Dean by Urban Villa Liverpool Company: Union Hanover Securities Doubletree Hilton Rooms: 182 Company: Sanguine Hospitality Rooms: 87 Holiday Inn- Crowne Plaza Aberdeen Airport ABZ Park Pullman Kings Dock Company: Dominvs Group Company: Accor Rooms: 358 Rooms: 216 Bath Roomzzz Aparthotel Liverpool City The Gainsborough, Bath SPA Company: Roomzzz Hotels Company: YTL Hotels Rooms: 108 Rooms: 99 Shankley Hotel Brentford Company: Signature Living Premier Inn Brentford (opened February 2015) Rooms: 61 Company: Whitbread Rooms: 124

Source: BDO Research and Hotelsdata

THE GUIDE TO THE PERFORMANCE OF HOTELS IN THE UK | HOTEL BRITAIN 2015 20

2014 SURVEY RESULTS

Our analysis covers a consistent sample of 656 hotels across the UK (totalling 82,371 rooms), with monthly data since 2010.

A quick glance at figure 8 shows that, apart from a minor occupancy blip in 2012, hotels in the UK have experienced a strong performance over the last five years.

In 2014, daily rooms yield rose by 4.5% to £71.03, the strongest rate of growth over the last three years. This was as a result of a 3.1% AARR increase to £91.55, as well as a 1.4% increase in occupancy. We note that 2013 performance for UK hotels was driven by the increase in occupancy levels, whereas 2014 saw AARR driving the performance.

FIGURE 8: Summary of performance, all UK hotels (2010-2014) TABLE 7: Summary of performance, UK hotels (2010-2014)

100 78 CAGR % 90 UK hotels (2010-2014) 77 80 2010 2011 2012 2013 2014 70 76 Occupancy 74.3 75.2 74.4 76.5 77.6 60 Year-on-Year - 1.3% -1.0% 2.8% 1.4% 1.1 £ 50 75 % growth(%) 40 AARR 83.81 86.38 89.19 88.80 91.55 74 30 Year-on-Year - 3.1% 3.3% -0.4% 3.1% 2.2 20 growth(%) 73 10 Rooms yield 62.23 64.97 66.38 67.96 71.03 Year-on-Year 0 72 - 4.4% 2.2% 2.4% 4.5% 3.4 2010 2011 2012 2013 2014 growth(%) AARR (£) Rooms yield (£) Occupancy (%) SOURCE: BDO research SOURCE: BDO research 21 HOTEL BRITAIN 2015 | THE GUIDE TO THE PERFORMANCE OF HOTELS IN THE UK

LONDON London hotels performance suffered a slowdown in growth during 2014. Occupancy was fairly stable, down by 0.2% to 82.6%, while AARR continued to grow, up by 0.9% to £148.42. As a result rooms yield was up 0.7% to £122.61.

Despite the slowdown of performance experienced recently, hotels in London have fully recovered their pre-recession performance. Occupancy has held up strongly despite increases in supply experienced in 2012 and 2014. Furthermore, AARR for 2014 was £10 higher than its 2008 peak, with rooms yield approximately £12 above the 2008 figure.

FIGURE 9: Summary of performance, London hotels (2010-2014) TABLE 8: Summary of performance, London hotels (2010-2014)

160 84 CAGR % London hotels 140 (2010-2014) 2010 2011 2012 2013 2014 120 83 Occupancy 83.1 82.8 81.4 82.8 82.6 -0.1 100 Year-on-Year -0.4% -1.7% 1.8% -0.2% £ 80 82 % growth(%) AARR 131.46 141.01 148.30 147.07 148.42 3.1 60 Year-on-Year 7.3% 5.2% -0.8% 0.9% 40 81 growth(%)

20 Rooms yield 109.19 116.70 120.65 121.75 122.61 2.9 Year-on-Year 0 80 6.9% 3.4% 0.9% 0.7% 2010 2011 2012 2013 2014 growth(%)

AARR (£) Rooms yield (£) Occupancy (%)

SOURCE: BDO research SOURCE: BDO research THE GUIDE TO THE PERFORMANCE OF HOTELS IN THE UK | HOTEL BRITAIN 2015 22

REGIONAL UK 2014 was a strong year for regional hotels, which experienced more robust results than their London counterparts. Occupancy was up by 2.3% to 75.1%. This is the first time that regional hotels experienced occupancy levels above the 75% since the compilation of our Hotel Britain statistics began in 2004.

However, AARR was the main driver behind this successful growth. Hotels in the regions posted a 7.7% increase in average room rate, up to £60.71. However we note that this is still about £15 below the rate achieved in 2008.

As a result of the increases in occupancy and AARR, regional UK hotel rooms yield grew by 10.2% to £45.60 in 2014. Regional hotels have experienced the fourth consecutive year of rooms yield increase, with strong rates of growth experienced in 2013 and 2014. We note that thanks to the increases in occupancy, rooms yield is only about £10 below its 2008 peak figure.

FIGURE 10: Summary of performance, regional hotels (2010-2014) TABLE 9: Summary of performance, regional hotels (2010-2014)

70 76 CAGR % Regional hotels 75 (2010-2014) 60 74 2010 2011 2012 2013 2014 50 73 Occupancy 69.9 71.5 71.0 73.4 75.1 1.8 Year-on-Year 40 72 - 2.3% -0.7% 3.4% 2.3% £ % growth(%) 71 30 AARR 55.93 55.29 55.80 56.35 60.71 2.1 70 Year-on-Year 20 - -1.2% 0.9% 1.0% 7.7% 69 growth(%) 10 68 Rooms yield 39.11 39.54 39.62 41.39 45.60 3.9 Year-on-Year 0 67 - 1.1% 0.2% 4.5% 10.2% 2010 2011 2012 2013 2014 growth(%) AARR (£) Rooms yield (£) Occupancy (%)

SOURCE: BDO research SOURCE: BDO research 23 HOTEL BRITAIN 2015 | THE GUIDE TO THE PERFORMANCE OF HOTELS IN THE UK

CAGR ANALYSIS FOCUS ON: THE BUDGET SEGMENT Figure 11 analyses the compound of annual growth rate (CAGR) for 2014 saw the budget end of the market outperforming the other occupancy, AARR and rooms yield for hotels in London and regional segments both in London and regional UK. One of the main UK from 2010 to 2014. reasons for this is the diversification of the budget offering with the development of new budget concepts such as Citizen M, hub by As we can see from the graph, London hotels have experienced a Premier Inn, Tune and the Qbic hotels among others. Furthermore, flat occupancy over the last five years. However, this is despite the the two biggest budget hotel brands in the UK, namely Premier increase in supply experienced during the run-up to the Olympics Inn and Travelodge, rolled out a major modernisation of their UK in 2012, as well as increases in supply at the top end of the market properties recently. Customers have changed and they are willing to experienced in 2014. In the capital, AARR continued to be the main sacrifice space for central locations, especially in the capital, while in driver behind hotel growth, as its five year rate of growth was 2.9%. the regions consumers still remain budget-conscious and seek out value for money deals. It is interesting to note that regional hotels experienced a higher occupancy CAGR rate over the same period, which grew by 1.8%. In London, tourist hotels saw a year-on-year rooms yield increase This was the result of record numbers of inbound visits in 2013 of 9.9% in 2014, beating every other segment. This was driven by and 2014, as well as improved economic conditions. AARR also hoteliers being able to raise the average room rate as demand for the continued to grow on the back of strong demand. As a consequence, segment remained strong. We note that the top end of the market the compound of annual growth rate of rooms yield for regional suffered a decline in rooms yield in 2014. This was mainly as a result hotels grew at a faster rate than that seen in London. This is the first of the increase in supply which introduced new competition. time since the 2001-2005 period, emphasising the exceptional year experienced by regional hotels.

FIGURE 11: CAGR Analysis for UK hotels 2010-2014 FIGURE 12: Rooms yield growth, London hotels

4 Townhouse/boutique

3 Tourist

2 Business class CAGR % change 1 First class

International deluxe 0 Occupancy AARR Rooms Yield Superior deluxe -1

Deluxe London Regional UK hotels -6% -4% -2% 0% 2% 4% 6% 8% 10% 12%

SOURCE: BDO research 2014 2013 2012 2011

SOURCE: BDO research THE GUIDE TO THE PERFORMANCE OF HOTELS IN THE UK | HOTEL BRITAIN 2015 24

TABLE 10: Rooms yield growth London hotels TABLE 11: Rooms yield growth regional hotels

Rooms yield growth London hotels Rooms yield growth regional hotels Segment (AARR) 2011 2012 2013 2014 Segment (AARR) 2011 2012 2013 2014 Deluxe (>£150) 6.3% 4.5% 0.1% -1.8% Country House 2.5% -0.8% 2.4% 3.5% Superior deluxe (>£200) 5.1% 5.9% 0.1% -3.3% >£80 4.7% 2.1% 6.0% 5.5% International deluxe (£150-200) 8.3% 1.7% 0.4% 1.4% £70-£80 0.8% 0.2% 4.0% 8.4% First class (£100-150) 8.5% 3.2% 1.9% 2.8% £60-£70 1.3% 1.4% 3.8% 9.2% Business class (£75-100) 7.3% 1.1% 3.5% 4.1% £50-60 0.1% 2.2% 2.8% 10.7% Tourist (<£75) 2.2% -4.7% 1.7% 9.9% <£50 -1.6% -4.1% 5.0% 17.9% Townhouse/boutique (>£100) 4.4% 3.0% 2.0% -0.5% SOURCE: BDO research

SOURCE: BDO research

Hotels in the regions witnessed a similar pattern. In 2014, the top end of the market continued to post growth, although it was the slowest growing segment for rooms yield. Over £80 hotels’ rooms yield was up by 5.5%, well below the 17.9% increase experienced by the Under £50 hotels.

It is interesting to note that in the regions, AARR was the main driver for growth, as demand remained strong for all segments analysed.

FIGURE 13: Rooms yield growth, regional UK hotels

<£50

£50-60

£80-£70

£70-£80

>£80

Country House

-5% 0% 5% 10% 15% 20%

2014 2013 2012 2011

SOURCE: BDO research

THE GUIDE TO THE PERFORMANCE OF HOTELS IN THE UK | HOTEL BRITAIN 2015 26

WINNERS AND LOSERS

Despite the global economic uncertainty country. Overall, prospects for the medium term are positive, as the Barclays Tourist Dynamics Report predicts visitors to the country will over the last few years, hotels in the UK have increase by 40% by 2017. proved their resilience and have experienced English hoteliers also saw a strong rate of rooms yield growth (up a blossoming year in 2014. Overall rooms 10%) driven by a healthy mix of occupancy and AARR increases. yield grew by 10.2%, driven by the 7.7% 2014 proved to be an exceptional year for regional UK destinations, increase in AARR. with only three out of 41 locations experiencing negative rooms yield growth. Furthermore there were 16 destinations that saw double digit When compared to the previous year, Northern Ireland hotels saw rooms yield growth during the same period. a rooms yield growth of 8.4% in 2014, thanks to a buoyant hotel market. Over the last two years, operating performance for hotels Unsurprisingly, Glasgow hotels topped the list for rooms yield growth, in the area has improved, leading to a surge in hotel investment. up a whopping 23.4%. This was attributed to the city hosting the 2014 Northern Ireland saw a CAGR rooms yield growth at 7.7% rate: the Commonwealth Games which pushed AARR up by 67% during the strongest rate of growth amongst all regions analysed over the last month of July. two years. Leeds hotels also enjoyed strong rooms yield growth, up 16.7% due to Wales hotels’ rooms yield also grew strongly in 2014, up 11.6%, driven the high increases in AARR. Hotels in the city benefitted from the Tour by the increase in AARR (up 8.2%). This was the result of an increase de France in the summer and also with a buoyant corporate season in in domestic day visits to the country (up 2% to 84m for the January June and November. to November 2014 period) as tourism demand for the area remained strong. Sheffield’s hotel performance was boosted by the budget segment, which helped to push its hotels’ average room rate up by 16.5%, In 2014, Scotland’s hotel occupancy was affected by the uncertainty resulting in rooms yield growing by 16.1%. The famous Sheffield resulting from the Scottish referendum, and was virtually flat on Doc/Fest was extended to a six day event in 2014, with Marketing the previous year. However, hotels were able to increase AARR Sheffield also claiming that its Conference Ambassador Programme considerably, resulting in rooms yield being up 10.9% to £56.44. generated £13.5m revenue from the corporate sector last year. Despite Scotland’s economy starting the year strongly, the recent drop in oil prices is likely to affect average room rate for hotels in the Other robust rooms yield achievers were Swindon (up 15.9% to £39.95), thanks to increased occupancy levels (up 10.9%) with resurgent corporate and conference demand; and Norwich where FIGURE 14: Rooms yield growth by country increases in both occupancy and AARR led to rooms yield growing by 15.9% to £40.53. 3.9% Regional UK 10.2% Gatwick Airport reported one of the busiest ever years in 2014, with over 38m passengers, up 7.6% from the previous year. However, 3.6% England hotels experienced a 6.9% decline in rooms yield over the same 10.0% period. Occupancy held stable, but the increase in supply led to a -8.4% decrease in average room rate as hotels competed for market 6.0% Scotland 10.9% share.

3.1% Nottingham’s story was more unstable. Having posted a positive Wales 11.6% performance in 2013, rooms yield declined by -3.4% in 2014. The relatively modest increase in AARR (2.7%) affected a fragile market 7.7% and drove occupancy down (-5.9%) in overall terms. However, we Northern Ireland 8.4% note that some hotels in the city have outperformed the market, posting strong growth. 0% 2% 4% 6% 8% 10% 12% 14% Solihull hotels saw a decline in rooms yield in 2014 (-2%). While CAGR 10-14 % ch. 13/14 occupancy remained positive, AARR was the main reason behind this decline (-4.6%). SOURCE: BDO research 27 HOTEL BRITAIN 2015 | THE GUIDE TO THE PERFORMANCE OF HOTELS IN THE UK

FIGURE 15: Rooms yield growth, regional UK cities

Glasgow Leeds Shefﬁeld Swindon Norwich Coventry Cheltenham Bath York Bristol Ashford Southampton Milton Keynes Gloucester Derby Stratford-upon-Avon Northampton Bradford Maidstone Cardiff Cambridge Birmingham Brighton Liverpool Bournemouth Belfast Newcastle Manchester Leicester Chester Reading Portsmouth Edinburgh Heathrow Inverness Aberdeen Windsor/Maidenhead Oxford Solihull Nottingham Gatwick

-8% -3% 2% 7% 12% 17% 22% 27%

% ch. 13/14 CAGR 10-14 SOURCE: BDO research THE GUIDE TO THE PERFORMANCE OF HOTELS IN THE UK | HOTEL BRITAIN 2015 28 29 HOTEL BRITAIN 2015 | THE GUIDE TO THE PERFORMANCE OF HOTELS IN THE UK

SUMMARY OF FIVE YEAR PERFORMANCE

All London hotels 147 27,731 83.1 82.8 81.4 82.8 82.6 -0.2% -0.1% 131.46 141.01 148.30 147.07 148.42 0.9% 3.1% 109.19 116.70 120.65 121.75 122.61 0.7% 2.9% Deluxe (>£150) 54 9,310 81.2 80.9 81.1 82.1 81.2 -1.1% 0.0% 219.82 234.85 244.89 242.05 240.24 -0.7% 2.2% 178.60 189.90 198.52 198.81 195.16 -1.8% 2.2% Superior deluxe (>£200) 32 5,241 81.0 80.1 80.4 81.2 79.8 -1.7% -0.4% 269.61 286.58 302.18 299.55 294.67 -1.6% 2.2% 218.37 229.52 243.03 243.25 235.28 -3.3% 1.9% International deluxe (£150-£200) 22 4,069 81.6 81.9 81.9 83.3 83.0 -0.4% 0.4% 156.86 169.25 172.13 169.78 172.83 1.8% 2.5% 127.95 138.56 140.96 141.48 143.50 1.4% 2.9% First class (£100-£150) 33 9,200 83.6 83.2 82.5 83.9 83.9 -0.1% 0.1% 108.95 118.81 123.68 123.86 127.41 2.9% 4.0% 91.11 98.89 102.07 103.96 106.88 2.8% 4.1% Business class (£75-£100) 15 3,929 86.2 86.4 83.7 84.9 85.7 0.9% -0.2% 76.16 81.52 85.05 86.73 89.50 3.2% 4.1% 65.64 70.40 71.16 73.65 76.66 4.1% 4.0% Tourist (<£75) 30 4,574 82.9 82.6 77.6 79.9 80.2 0.3% -0.8% 51.04 52.35 53.06 52.41 57.38 9.5% 3.0% 42.32 43.24 41.19 41.89 46.02 9.9% 2.1% Townhouse/boutique (>£100) 15 718 80.6 80.4 79.3 79.0 80.3 1.7% -0.1% 258.27 270.36 282.23 289.19 282.97 -2.2% 2.3% 208.12 217.30 223.79 228.34 227.15 -0.5% 2.2%

Regional UK 509 54,640 69.9 71.5 71.0 73.4 75.1 2.3% 1.8% 55.93 55.29 55.80 56.35 60.71 7.7% 2.1% 39.11 39.54 39.62 41.39 45.60 10.2% 3.9% England 427 45,720 69.4 70.8 70.3 72.8 74.7 2.6% 1.9% 55.18 54.42 54.95 54.95 58.93 7.2% 1.7% 38.29 38.55 38.62 40.01 44.02 10.0% 3.6% Scotland 55 6,481 73.8 76.3 76.1 77.8 77.9 0.1% 1.4% 60.51 61.17 61.42 65.40 72.43 10.8% 4.6% 44.68 46.68 46.75 50.91 56.44 10.9% 6.0% Wales 24 1,937 69.2 70.6 68.7 72.0 74.3 3.2% 1.8% 57.68 55.23 55.75 56.06 60.64 8.2% 1.3% 39.92 38.98 38.32 40.36 45.04 11.6% 3.1% N Ireland 3 502 70.6 74.4 78.9 80.4 80.6 0.2% 3.4% 54.96 52.87 55.41 59.85 64.74 8.2% 4.2% 38.80 39.33 43.71 48.11 52.16 8.4% 7.7%

>£80 52 7,559 73.5 75.0 74.9 76.4 77.5 1.4% 1.3% 82.29 84.42 86.24 89.71 93.34 4.1% 3.2% 60.47 63.31 64.63 68.54 72.31 5.5% 4.6% £70-£80 59 9,858 72.3 72.2 72.5 73.8 75.7 2.7% 1.2% 68.46 69.17 68.98 70.49 74.42 5.6% 2.1% 49.53 49.91 50.01 51.99 56.37 8.4% 3.3% £60-£70 73 11,317 70.0 71.2 71.6 73.0 75.3 3.1% 1.8% 60.13 59.90 60.36 61.47 65.12 5.9% 2.0% 42.08 42.63 43.23 44.88 49.01 9.2% 3.9% £50-60 49 7,030 70.2 70.6 71.2 72.8 74.7 2.6% 1.6% 50.41 50.14 50.90 51.11 55.16 7.9% 2.3% 35.40 35.42 36.21 37.23 41.21 10.7% 3.9% <£50 276 19,026 67.1 70.3 68.2 72.6 73.9 1.8% 2.5% 37.04 34.78 34.36 33.90 39.25 15.8% 1.5% 24.85 24.46 23.45 24.62 29.02 17.9% 4.0%

Country House 25 2,282 67.0 67.4 67.0 67.8 69.6 2.5% 0.9% 85.03 86.66 86.50 87.48 88.34 1.0% 1.0% 56.96 58.41 57.96 59.34 61.45 3.5% 1.9% Airport hotels 19 5,073 81.0 80.0 79.3 80.3 81.2 1.1% 0.1% 59.47 61.13 62.00 62.35 64.47 3.4% 2.0% 48.16 48.89 49.18 50.08 52.35 4.5% 2.1% THE GUIDE TO THE PERFORMANCE OF HOTELS IN THE UK | HOTEL BRITAIN 2015 30

Country House 25 2,282 67.0 67.4 67.0 67.8 69.6 2.5% 0.9% 85.03 86.66 86.50 87.48 88.34 1.0% 1.0% 56.96 58.41 57.96 59.34 61.45 3.5% 1.9% Airport hotels 19 5,073 81.0 80.0 79.3 80.3 81.2 1.1% 0.1% 59.47 61.13 62.00 62.35 64.47 3.4% 2.0% 48.16 48.89 49.18 50.08 52.35 4.5% 2.1% 31 HOTEL BRITAIN 2015 | THE GUIDE TO THE PERFORMANCE OF HOTELS IN THE UK

2014 Occupancy (%) % ch. CAGR AARR (£) % ch. CAGR Rooms yield (£) % ch. CAGR No. of hotels No. of rooms 2010 2011 2012 2013 2014 % ch 13/14 CAGR (%) 2010 2011 2012 2013 2014 % ch 13/14 CAGR (%) 2010 2011 2012 2013 2014 % ch 13/14 CAGR (%) Aberdeen 8 989 72.5 75.7 79.3 77.8 76.1 -2.2% 1.2% 69.86 73.50 78.31 93.58 98.48 5.2% 9.0% 50.64 55.68 62.07 72.83 74.93 2.9% 10.3% Ashford 3 391 67.7 69.5 69.5 71.1 71.8 1.0% 1.5% 46.28 48.65 48.65 49.32 54.13 9.8% 4.0% 31.33 33.81 33.81 35.05 38.87 10.9% 5.5% Bath 3 238 74.9 76.3 75.8 76.5 79.3 3.8% 1.5% 50.93 49.71 46.88 47.63 51.43 8.0% 0.2% 38.14 37.93 35.53 36.42 40.80 12.0% 1.7% Belfast 3 502 70.6 74.4 78.9 80.4 80.6 0.2% 3.4% 54.96 52.87 55.41 59.85 64.74 8.2% 4.2% 38.80 39.33 43.71 48.11 52.16 8.4% 7.7% Birmingham 10 1,453 67.1 65.4 65.0 69.3 70.4 1.7% 1.2% 55.27 52.54 50.41 50.24 53.88 7.3% -0.6% 37.09 34.34 32.77 34.81 37.96 9.0% 0.6% Bournemouth 3 262 71.6 75.0 73.3 75.3 77.7 3.1% 2.1% 82.77 80.24 81.94 80.93 85.13 5.2% 0.7% 59.23 60.16 60.05 60.97 66.13 8.5% 2.8% Bradford 3 220 62.9 64.2 64.2 67.5 70.1 3.8% 2.7% 42.55 36.49 36.49 36.63 38.71 5.7% -2.3% 26.77 23.44 23.44 24.72 27.13 9.7% 0.3% Brighton 4 703 69.2 72.8 73.3 74.0 74.9 1.2% 2.0% 62.15 65.69 66.68 67.19 72.12 7.3% 3.8% 43.01 47.85 48.85 49.75 54.04 8.6% 5.9% Bristol 8 1,255 73.1 71.2 70.1 74.7 77.0 3.1% 1.3% 63.80 63.85 63.21 63.98 69.37 8.4% 2.1% 46.66 45.49 44.32 47.83 53.44 11.7% 3.4% Cambridge 4 367 73.6 75.7 75.2 78.4 79.5 1.5% 1.9% 57.95 56.37 57.54 58.41 62.85 7.6% 2.1% 42.67 42.65 43.27 45.78 49.99 9.2% 4.0% Cardiff 10 1,133 73.0 73.8 72.0 75.2 77.4 2.9% 1.5% 66.77 65.17 66.22 67.01 71.35 6.5% 1.7% 48.74 48.12 47.65 50.43 55.22 9.5% 3.2% Cheltenham 3 351 71.9 71.0 71.0 72.5 75.4 4.0% 1.2% 53.23 52.72 51.89 53.20 57.98 9.0% 2.2% 38.28 37.42 36.85 38.58 43.73 13.3% 3.4% Chester 4 402 65.9 67.5 68.9 72.3 74.4 2.8% 3.1% 58.92 56.00 56.90 59.42 61.28 3.1% 1.0% 38.82 37.78 39.23 42.99 45.59 6.0% 4.1% Coventry 5 392 66.3 67.5 66.4 70.2 71.8 2.3% 2.0% 51.83 49.97 50.51 48.82 54.15 10.9% 1.1% 34.37 33.74 33.54 34.29 38.90 13.4% 3.1% Derby 4 444 62.3 66.5 71.6 71.2 72.2 1.3% 3.7% 54.79 51.80 54.58 53.10 57.71 8.7% 1.3% 34.16 34.47 39.06 37.83 41.66 10.1% 5.1% Edinburgh 15 1,985 75.4 79.3 77.3 79.5 78.3 -1.5% 1.0% 68.22 70.89 71.00 76.11 80.62 5.9% 4.3% 51.45 56.20 54.91 60.50 63.15 4.4% 5.3% Gatwick 4 846 80.0 79.3 81.6 79.0 80.3 1.6% 0.1% 73.14 74.11 75.48 78.59 71.99 -8.4% -0.4% 58.52 58.79 61.56 62.11 57.82 -6.9% -0.3% Glasgow 11 2,155 77.4 77.7 77.2 79.2 81.5 3.0% 1.3% 57.80 57.01 55.97 56.01 67.12 19.8% 3.8% 44.76 44.28 43.22 44.35 54.72 23.4% 5.2% Gloucester 3 326 70.9 70.5 70.5 75.8 74.9 -1.2% 1.4% 51.95 48.85 48.85 49.26 55.01 11.7% 1.4% 36.83 34.43 34.43 37.32 41.20 10.4% 2.8% Heathrow 13 3,953 81.3 79.5 77.8 78.8 80.3 1.9% -0.3% 59.67 61.57 62.54 61.82 62.95 1.8% 1.3% 48.52 48.95 48.66 48.72 50.55 3.8% 1.0% Inverness 3 256 70.0 71.6 71.6 73.2 69.7 -4.8% -0.1% 48.24 45.68 45.68 47.97 51.99 8.4% 1.9% 33.76 32.71 32.71 35.10 36.22 3.2% 1.8% Leeds 10 1,433 71.1 72.1 72.3 77.1 77.8 1.0% 2.3% 54.02 52.21 53.21 55.45 64.11 15.6% 4.4% 38.40 37.66 38.50 42.73 49.87 16.7% 6.8% Leicester 4 568 64.9 64.7 62.3 70.3 71.0 1.0% 2.3% 56.63 56.24 55.84 55.24 58.57 6.0% 0.8% 36.73 36.40 34.81 38.86 41.60 7.1% 3.2% Liverpool 9 1,351 70.8 70.4 67.2 68.3 71.8 5.1% 0.3% 61.03 60.28 59.30 64.15 66.18 3.2% 2.0% 43.21 42.44 39.84 43.81 47.51 8.5% 2.4% Luton 3 640 62.4 69.2 68.5 71.0 69.9 -1.5% 2.9% 61.30 60.43 59.11 54.59 52.18 -4.4% -3.9% 38.27 41.79 40.49 38.76 36.50 -5.8% -1.2% Maidstone 4 389 67.3 69.9 72.1 73.2 75.6 3.3% 3.0% 56.90 55.72 55.49 55.78 59.10 5.9% 1.0% 38.29 38.94 40.02 40.82 44.68 9.5% 3.9% Manchester 15 2,304 71.2 73.6 73.3 75.2 77.6 3.2% 2.2% 59.21 59.60 59.85 62.39 65.24 4.6% 2.5% 42.13 43.87 43.89 46.93 50.64 7.9% 4.7% Milton Keynes 3 501 72.3 74.6 74.3 76.2 76.0 -0.3% 1.2% 58.20 61.63 62.98 65.89 72.96 10.7% 5.8% 42.10 45.97 46.79 50.20 55.44 10.4% 7.1% Newcastle 8 1,129 73.9 74.6 72.0 72.4 75.8 4.8% 0.7% 57.27 56.11 54.77 52.89 54.52 3.1% -1.2% 42.29 41.87 39.46 38.28 41.34 8.0% -0.6% Northampton 3 285 67.4 65.9 69.2 70.4 73.9 5.0% 2.3% 57.20 58.24 56.85 56.64 59.26 4.6% 0.9% 38.57 38.38 39.35 39.89 43.81 9.8% 3.2% Norwich 5 458 67.4 70.2 68.3 73.8 77.0 4.4% 3.4% 49.23 48.08 48.59 47.38 52.63 11.1% 1.7% 33.20 33.76 33.20 34.96 40.53 15.9% 5.1% Nottingham 11 1,298 62.9 66.0 65.8 69.9 65.8 -5.9% 1.1% 52.38 51.62 52.41 51.03 52.41 2.7% 0.0% 32.95 34.05 34.49 35.68 34.49 -3.4% 1.1% Oxford 4 538 73.4 73.8 74.4 81.2 78.9 -2.8% 1.8% 54.85 57.10 57.16 59.08 62.13 5.2% 3.2% 40.25 42.13 42.51 47.98 49.03 2.2% 5.1% Portsmouth 4 576 79.1 79.0 77.3 81.9 81.1 -1.0% 0.6% 69.15 67.98 70.96 72.09 76.24 5.8% 2.5% 54.72 53.71 54.85 59.02 61.81 4.7% 3.1% Reading 9 982 61.3 65.7 67.0 70.4 68.8 -2.3% 2.9% 49.36 50.20 53.11 54.77 59.15 8.0% 4.6% 30.28 33.00 35.59 38.57 40.71 5.5% 7.7% Sheffield 3 424 60.7 66.4 62.8 70.8 70.5 -0.4% 3.8% 38.68 37.21 38.46 37.67 43.90 16.5% 3.2% 23.49 24.72 24.16 26.65 30.94 16.1% 7.1% Solihull 4 754 65.7 63.5 63.8 65.9 67.7 2.7% 0.7% 79.36 76.79 76.95 78.13 74.52 -4.6% -1.6% 52.17 48.80 49.12 51.47 50.44 -2.0% -0.8% Southampton 4 507 71.4 74.9 75.8 78.5 81.6 3.9% 3.4% 54.50 49.70 51.41 52.13 55.43 6.3% 0.4% 38.92 37.23 38.95 40.93 45.22 10.5% 3.8% Stratford-upon-Avon 4 512 67.8 69.9 67.8 68.8 70.4 2.3% 0.9% 69.51 68.55 68.63 69.25 74.46 7.5% 1.7% 47.14 47.91 46.52 47.65 52.44 10.0% 2.7% Swindon 5 702 61.3 64.2 63.5 66.9 74.2 10.9% 4.9% 51.06 52.35 55.77 51.54 53.86 4.5% 1.3% 31.30 33.63 35.43 34.46 39.95 15.9% 6.3% Windsor/Maidenhead 3 425 70.8 71.9 74.7 73.7 72.5 -1.7% 0.6% 72.14 74.91 76.97 79.45 82.82 4.2% 3.5% 51.07 53.86 57.51 58.59 60.01 2.4% 4.1% York 5 542 77.3 78.7 78.7 78.9 82.0 3.9% 1.5% 58.90 59.14 59.14 58.33 62.77 7.6% 1.6% 45.51 46.57 46.57 46.04 51.49 11.8% 3.1% THE GUIDE TO THE PERFORMANCE OF HOTELS IN THE UK | HOTEL BRITAIN 2015 32

THE GUIDE TO THE PERFORMANCE OF HOTELS IN THE UK | HOTEL BRITAIN 2015 34

THE ROAD AHEAD

After a strong 2014, the UK economy is CHANGES IN TOURISM VISITOR PATTERNS forecast to continue to expand throughout Recently there has been a slowdown of visitors from the BRIC economies that is likely to continue for the short to medium term. 2015, with GDP growth expected to be Apart from the obvious slowdown of incoming visitor numbers from between 2.5 and 2.7%. However, there are countries like Russia, the Chinese market has also shown a decline in visitors in 2014. In the People’s Republic of China, GDP growth some variables that might reduce the pace of for 2014 has not matched earlier forecasts. Having said that, Asian growth. companies are still investing and expanding in the UK, with the latest news that Peninsula Hotels have secured a London property, The general election in May is one of the most obvious factors that reaffirming the importance of the relationships between the UK and could pose uncertainties in the short term. While companies remain the Far East for both trade and tourism flows. positive, they are vigilant about possible scenarios that might arise from the election. In addition, the drop in the oil price is expected In addition to the reduced number of incoming visitors from the BRIC to continue to drive consumers’ consumption. However, there is a economies, the recent rise in the value of the pound, at a seven year possible risk of short term deflation for the UK, as already experienced historic high against the euro, is likely to affect the number of visitors by some of its European counterparts. At the time of writing, UK from the continent, assuming that this trend is likely to continue inflation has fallen to essentially zero, a record low level, halting during the current year. prospects of an imminent interest rate increase by the Bank of However, Britons are expected to take more holidays in 2015 as a England. result of the recent decline in oil prices, lower inflation and increased Having said that, despite all the uncertainty surrounding future household income. This should definitely boost domestic tourism and economic performance, the fundamentals of the economy in the UK expenditure, as consumers remain confident, but, coupled with the remain strong, with wages continuing to grow and unemployment exchange rate, could also result in increased outbound tourism to the falling well below 6%, and the manufacturing sector growing at its continent as holidays may become cheaper. fastest rate for over six months in February, according to the CBI. RUGBY WORLD CUP CONTINUED GROWTH FOR UK HOTELS Hotels in the UK will be exposed globally when the Rugby World The record number of visitors in 2014, coupled with the improved Cup takes place in the autumn. Apart from the obvious benefits economic outlook, are likely to continue to have a positive affect on of improvements for both occupancy and AARR, the country will hotels across the country, with tourism expected to break the 35m have the opportunity to repeat its global showcase as experienced barrier during 2015, assisted by the increase in disposable income. during the Olympic Games in 2012. This is likely to result in renewed interest in the UK and in turn to increased inbound visits. Hotels in the London country traditionally have benefited from sporting events such as the After experiencing a somewhat bumpy 2013 and a difficult start Olympics, the Commonwealth Games, and indeed the Rugby World to 2014, hotels in London enjoyed growth for the rest of 2014. Cup. The capital still continues to be one of the top global cities for hotel development. 2015 is poised to continue on an upward path, with both occupancy and AARR benefitting from strong demand. CONTINUED TRANSACTION ACTIVITY Occupancy is at one of the highest levels in the capital, and rates have 2015 is poised to continue the trend for hotel transactions both in also continued to grow throughout. We expect this healthy mix of London and in the regions. As mentioned earlier, lenders are opening growth to continue in 2015 for hotels in the capital. up to the improved economic conditions and are prepared to pay premium prices for the right property. Regions After their record year in 2014, hotels in the regions are still poised to continue to post growth throughout 2015. However, the pace of growth could be affected by the troubles experienced in the Eurozone and the pound- euro exchange rate which could deter inbound visits. 35 HOTEL BRITAIN 2015 | THE GUIDE TO THE PERFORMANCE OF HOTELS IN THE UK

WIN A ONE NIGHT STAY FOR TWO AT THE CONRAD LONDON ST JAMES HOTEL, COURTESY OF THE SPLENDID HOSPITALITY GROUP The prize includes a one night stay for two at the Conrad London St James including breakfast and dinner. Subject to availability, valid until November 2016. THE GUIDE TO THE PERFORMANCE OF HOTELS IN THE UK | HOTEL BRITAIN 2015 36

HOTEL BRITAIN 2015 COMPETITION

ABOUT THE GROUP AND THE HOTEL Controlled and directed by Shiraz and Nadeem Boghani, Splendid Hospitality Group is one of the UK’s fastest growing privately- owned hotel groups which has made a name for itself through the design, construction and operation of a full range of hotel styles and locations.

The group owns 15 properties across the UK, both franchised and unbranded. Splendid Hospitality Group are proud to be developing hotels in some of the UK’s best destinations including the 5 Star Conrad St James, the Grand Hotel and Spa in York, Vanbrugh House Oxford, Indigo Edinburgh, the Holiday Inn Wembley, as well as a the planned Hilton London Bankside and Indigo Hotel in York.

Ideally situated just steps from St James’s Park, Buckingham Palace and the Houses of Parliament, Conrad London St James offers a smart choice for the modern traveller. Navigate around the city with ease with convenient transport links nearby the hotel.

Encased in a historic 19th Century façade, the chic and contemporary interior of Conrad London St James showcases original art installations and locally inspired design.

HOW TO ENTER All you need to do to enter is predict as accurately as you can the occupancy and average achieved room rate (AARR) per occupied room in BDO’s sample of hotels in Britain for the 2015 calendar year. Answers should be submitted in the following format:

1. Occupancy: ...... % (to 1 decimal place)

2. AARR: £...... (to 2 decimal places)

You can submit your answer at the Hotel Britain Launch Event using the slips provided, or by emailing [email protected], with ‘Hotel Britain Competition Entry’ in the subject line. Entries close on 31 May 2015. Only one entry per person. The winner will be notified by 5 March 2016. The winner will receive a voucher valid for redemption until November 2016.

THE GUIDE TO THE PERFORMANCE OF HOTELS IN THE UK | HOTEL BRITAIN 2015 38

CLAIRVOYANT CORNER FROM LAST YEAR’S COMPETITION WINNER

When asked about the outlook for the UK hotel market last year during the Hotel Britain event, several influencing factors crossed my mind.

These included the UK’s economic recovery, new supply entering the market adding further pressure on under-invested assets, the ongoing sophistication by guests to achieve a competitive rate and the Glasgow Commonwealth Games. London continues to be strong, combined with the continued resurgence in Provincial UK, has influenced the UK hotel market’s performance. I am really pleased that my prediction came within a whisker of the actual performance.

Following Topland’s acquisition in December 2013 of the Menzies Hotel Group, 2014 started with a rush which continued as the year progressed, it was a very exciting year for Topland as we further established ourselves in the UK hotel sector. The subsequent acquisition of Hallmark Hotels in August 2014 was soon followed in quarter four with a period of due diligence and travels around the North East as Topland evaluated The Feather Hotel portfolio. This culminated in the acquisition of Feathers in mid-January 2015. During the thirteen months from December 2013 to January 2015 Topland increased from one owned and operated hotel to twenty-eight hotels in addition to our Royal Crescent Hotel in Bath and nine more hotels leased to Thistle, Hilton and Ramada owned by Topland since 2006. Topland’s internal asset management team works closely with Bespoke who operate the hotels on behalf of Topland. Topland’s combined asset management expertise will continue to focus on driving revenue and exceeding EBITDA expectations across the portfolio to maximise value. Topland has exciting plans to consolidate the three portfolios which will assist in achieving growth through improved revenue strategies and JAKE EGBERTS procurement benefits from enhanced scale. Topland is investing capital to enhance its hotel portfolio and constantly seizing new Asset Manager – Hotels opportunities to further grow the portfolio. We look forward to Topland Group of Companies continued buoyancy in the hotel sector through 2015 and onwards.

THE GUIDE TO THE PERFORMANCE OF HOTELS IN THE UK | HOTEL BRITAIN 2015 40

SURVEY COVERAGE

Hotel Britain is the definitive guide to the PARTICIPATING HOTEL COMPANIES performance and prospects of the UK’s hotel Alongside the many individual properties who so kindly industry. It is compiled from the responses of contributed data to this survey, we would like to recognise the a representative cross section of 656 hotels invaluable participation of the following hotel companies: comprising 82,371 rooms, and including 147 Accor Macdonald Hotels & Resorts London hotels and 509 around the rest of Bryant Hospitality Malmaison the country. Carlson Rezidor Hotel Group Marriott International Choice Hotels Europe Menzies The results of this survey are grouped for convenience according to Como Hotels MyHotels Group geographic location. We breakdown the performance of hotels in key centres across the country, and analyse both London and the regions Dominvs New Light hotels in terms of average room rate. English Lakes NH Hoteles Exclusive Hotels The Hotel Collection Hotels in the capital are divided into four main bands according to the average room rate achieved during 2014. The top rate band, Deluxe, Firmdale Hotels QHotels comprises Superior Deluxe and International Deluxe properties. First Inns Park Plaza Hotels This is followed by First Class and Business properties, with the final Focus Hotels Principal Hayley category being Tourist hotels. There is also a separate performance Four Seasons Hotels and Ramada hotels breakdown, which extends across all these rate boundaries, for Resorts townhouse properties. Regional hotels have been placed in one of five Red Carnation Hotels rate bandings, with a separate performance breakdown, which extends glh Hotels Rocco Forte Collection across all these rate boundaries, for Country House properties. Hallmark hotels Shire Hotels Hand Picked Hotels To ensure that our year-on-year results are directly comparable, only Sol Melia International properties able to contribute data from the last five years have been Hyatt Hotels and Resorts Starwood Hotels and Resorts included. Hotels which have closed for a period of refurbishment or InterContinental Hotel Group Taj Hotels Resorts & Palaces have opened during this period have been excluded. Interstate hotels The Doyle Collection Group Jumeirah Travelodge Jurys Inn Wyndham GLOSSARY Kew Green Hotels Definitions of some of the terms used in this report are provided below. • Room occupancy: the ratio of total occupied rooms to total available. ABOUT THIS REPORT • Average achieved room rate (AARR): rooms revenue divided by Research and editorial: Michele Pasqui the total number of guest rooms occupied during the year (also known as ADR). To order further copies of the report please contact: • (Average daily) rooms yield: room occupancy multiplied by the Michele Pasqui average achieved room rate (also known as RevPar). Tel: (+44) 020 7893 3654 • Current values: values expressed on an actual basis, including the Email: [email protected] effects of inflation. • Constant values: historic and future values rebased to a base year by removing the inflation element. • Compound Annual Growth Rate (CAGR): average growth rate on an annualised basis.

THE GUIDE TO THE PERFORMANCE OF HOTELS IN THE UK | HOTEL BRITAIN 2015 42

BDO LEISURE AND HOSPITALITY SERVICES

Our team works with international There is no other sector consultancy in Europe with a research and performance database that stretches back as far as ours, or contains businesses across the leisure industries, the volume of information that we possess. Our research and including restaurants and bars, betting and publications team, and our archive facility, ensures that our clients and consultants have immediate access to the latest authoritative gaming, hotels, professional sports and data. fitness, and travel and tourism. In short, if you are active in the hotel industry then you should be We provide assurance, tax and advisory services to our clients who talking to BDO. range from small owner-managed businesses to large corporations in both the private and public sectors, many of whom are market Specialist advice we provide to the sector includes: leaders. • Feasibility studies • Valuations • Strategic consulting HOTELS • Litigation support/expert witness services Experience says a lot about a firm. BDO’s hotel involvement stretches back almost 100 years and our London office established • Transaction support its sector consultancy in the early 1970s. Since then we have • Operator searches undertaken thousands of assignments throughout Europe, the • Mergers and acquisitions including MBOs, MBIs and flotations Middle East, Africa and the Caribbean. • Fund raising and refinancing This expertise covers the entire spectrum of investment and • Financial investigations operating activities and our involvement brings credibility, • Systems reviews competence and independence to any project. • Turnaround and distressed situations Our team of dedicated professionals have experience gained from • Need analysis. a range of industry disciplines. This means that we have a wider perspective and can use their practical knowledge to achieve the best possible outcome for our clients. 43 HOTEL BRITAIN 2015 | THE GUIDE TO THE PERFORMANCE OF HOTELS IN THE UK

BETTING AND GAMING Services we provide to our clients include: BDO acts as auditor, tax adviser and consultant to many UK and • Corporate financing and flotations international betting and gaming businesses, both private and • Business assurance and risk assurance services publicly quoted. Our clients have ranged from many of the major • Tax planning and structuring ‘bricks and mortar’ bookmaking and casino operators to major offshore telephone and internet sports books, casinos, poker and • Employment tax, including specialism in troncs, NESTs etc other online gaming activities. As well as the more traditional forms • IT controls, environment reviews and systems improvement advice of betting and gaming, we also act for FCA regulated businesses in • Business reviews and strategic planning the financial trading, financial spread betting and CFD sector. • Property and corporate acquisition and disposals Specialist advice we can provide to the sector includes: • Installation of management reporting and controls and internal • International tax planning and structuring audit functions • Corporate financing and flotations • Working capital improvement reviews and administrative receiverships. • Property and corporate acquisitions and disposals • Financial Services Act regulations and compliance • Installation of management reporting and controls and internal PROFESSIONAL SPORTS AND EVENTS audit functions Our sports and events client base includes businesses as broad • IT controls, environment reviews and systems improvement advice as individual golf courses and public sector clubs to fitness centre • Feasibility studies chains and listed football clubs. BDO has a bank of experienced specialists in this sector to help with your particular business needs, • Valuations no matter how niche you may believe them to be, we can help you • Economic impact assessments realise your potential. • Strategy and business planning. Specialist advice we can provide to the sector includes: • Funding for redevelopment and/or expansion RESTAURANTS, BARS AND PUBS • Private/public partnerships BDO is recognised as the leading adviser to the restaurants and bars • Risk assessment and planning for site redevelopment or relocation sector, blending sector knowledge and experience with practical • Tax planning and compliance. advice which is aimed at making a real difference to our clients’ performance.

We are one of the market leaders in the sector, advising more restaurant groups in the UK than any other accounting firm. We have strong industry insight and experience in restaurants, bars, clubs, coffee bars and food retailers.

This industry-focused approach ensures our clients benefit from the specialist expertise and diverse skills of people that know their business, market and industry. THE GUIDE TO THE PERFORMANCE OF HOTELS IN THE UK | HOTEL BRITAIN 2015 44

TRAVEL AND TOUR OPERATORS OUR HOTELS TEAM The travel sector has undergone some of the biggest changes we For more information on any of our services for the hotel industry, have witnessed to one particular industry over the last few years. It please contact the relevant BDO expert below has been a roller-coaster ride of new entrants and new technology, consolidation and unpredicted new challenges to business, such as SARS and terrorism. MANAGEMENT CONSULTING ROBERT BARNARD BDO has helped its travel clients turn a turbulent time into one of [email protected] opportunity. Our commitment to this sector has seen us attract some of the best known names in the business – from owner managed private businesses through to large listed companies with AUDIT international networks. By working with leading organisations from the travel industry, we ensure we are always developing new ways to DAVID CAMPBELL address your industry and regulatory issues. BDO is an ABTA Travel [email protected] Industry Partner and provides the section on Travel Agents and Tour Operators for Butterworth’s Financial Reporting and Accounting for Specialised Sectors. We have members on the ICAEW/ABTA Working AUDIT Group instigated by ABTA and also on the ICAEW/CAA Working STUART COLLINS Group instigated by the CAA. [email protected] Specialist advice we can provide for your sector includes: • ATOL applications TAXATION • Tour Operator Margin Scheme JAMES WELCH • Industry regulation and compliance [email protected] • Flotations, acquisitions and disposals • Tax planning and compliance for the travel industry BUSINESS RESTRUCTURING • Business continuity planning. SARAH RAYMENT [email protected]

CORPORATE FINANCE, PETER HEMINGTON [email protected] 45 HOTEL BRITAIN 2015 | THE GUIDE TO THE PERFORMANCE OF HOTELS IN THE UK THE GUIDE TO THE PERFORMANCE OF HOTELS IN THE UK | HOTEL BRITAIN 2015 46 This publication has been carefully prepared, but it has been written in general terms and should be seen as broad guidance only. The publication cannot be relied upon to cover specific situations and you should not act, or refrain from acting, upon the information contained therein without obtaining specific professional advice. Please contact BDO LLP to discuss these matters in the context of your particular circumstances. BDO LLP, its partners, employees and agents do not accept or assume any liability or duty of care for any loss arising from any action taken or not taken by anyone in reliance on the information in this publication or for any decision based on it. BDO LLP, a UK limited liability partnership registered in England and Wales under number OC305127, is a member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms. A list of members’ names is open to inspection at our registered office, 55 Baker Street, London W1U 7EU. BDO LLP is authorised and regulated by the Financial Conduct Authority to conduct investment business. BDO is the brand name of the BDO network and for each of the BDO Member Firms. BDO Northern Ireland, a partnership formed in and under the laws of Northern Ireland, is licensed to operate within the international BDO network of independent member firms. Copyright © April 2015 BDO LLP. All rights reserved. www.bdo.co.uk