Hotel Review Issue 17/01
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Hotels Restaurants Pubs Leisure Leisure Property Specialists Investments Hotel Review Issue 17/01 SELLING YOUR HOTEL HOTELS IN DEMAND LEAF HOTELS Lesley Watmough tells you Divisional Director, Andy Frisby We quizzed the managing what to consider before you sell looks at the small hotel market director of East Kent group your hotel. in four key London locations. Leaf Hotels. Onwards and upwards Paul Hardwick Director & Head of Hotels Uncertain, turbulent, concerning and At one end of the spectrum, Generator exciting are all words used to describe Hostels was acquired by Queensgate current market and economic conditions, Investment from Patron Capital, an influenced particularly by recent and investment partner of Invesco, for a Robust demand, supported by ongoing political events associated with reported €450million. The company Brexit and the government elections. operates 8,639 hostel bed spaces in resilient economic conditions, locations including London, Paris and funding opportunities, The reaction to these conditions from Copenhagen. At the other end of the positive investment returns, operators, investors and funders, however, spectrum, we continue to see the smaller, appears to be one of quiet confidence but well established, multiple hotel and strong underlying trade and the leisure sector continues to defy operating companies continue to expand and profit fundamentals, pessimistic speculation, as has economic through selective individual acquisitions. stability with better than expected GDP means the sector remains growth and falling unemployment. Although Potential disrupters do, however, remain, attractive. wage growth versus inflation remains a not least with the recent Business darker cloud. Rate revaluation which will see many businesses suffering significant increases Confidence is demonstrated by the in rates payable, the introduction of the continued strong levels of activity across Apprenticeship Levy adding to the tax all leisure property sectors, with hotels burden of most multiple operators and, of notably experiencing a strong and seemingly course, ongoing concerns and the incidence growing pipeline of deals, both small and of terrorist attacks. large. Robust demand, supported by resilient economic conditions, funding opportunities, The status quo is undoubtedly going to positive investment returns, and strong be shaken up over the coming months, underlying trade and profit fundamentals, however, the prevailing attitude within the means the sector remains attractive. leisure property sector is seemingly that life goes on and the UK is big enough and old enough to succeed whatever. Cover image: Staffield Hall Country Retreats, Penrith – Currently available with Fleurets 2 Hotel Review Issue 17/01 fleurets.com In this issue HOTELS M&A Activity - Alive and well 4 Head of Hotels, Paul Hardwick, looks at the corporate M&A Activity across the hotels sector. Preparing to sell your hotel 5 Lesley Watmough tells you what to consider M&A Activity before you sell your hotel. Page 4 Brummy Marvellous 6 - 7 Andrew Whelan joined Fleurets in 2016 and in this article he reveals his predictions. Coaching Inns - Staging a Comeback! 8 Coaching inns are seeing a nationwide comeback, but why? Andrew Whelan explores. Small Hotels are in Demand 9 Andy Frisby looks at the small hotel market in four key London locations. Page 6 Brummy Marvellous Leaf Hotels 10 We quizzed the managing director of East Kent group Leaf Hotels after his latest acquisition. Hotel Contacts 11 Find your regional hotels contact from across our UK network of offices. Properties 12 - 15 Page 9 Small Hotels are in Demand Important notice: Unless otherwise stated, all properties are being dealt with on a Sole Selling Rights basis. The Leisure Property Specialists prices and other particulars regarding properties are correct at the time of going to press, June 2017. As prices can Fleurets Hotel Review be altered by the vendor at any time, interested potential buyers should check the latest position with Fleurets before Published by Fleurets Ltd viewing. The information contained in this publication is not 4 Roger Street, London WC1N 2JX to be reproduced in whole or in part without the expression permission in writing of Fleurets Ltd. Enquiries: Lizzie Hawes - PR and Marketing Manager T: 020 7280 4745 © Copyright - Fleurets Ltd 2017 London. E: [email protected] ‘All rights reserved’. Leaf Hotels W: fleurets.com/onmarket Page 10 fleurets.com Hotel Review Issue 17/01 3 M&A Activity - Alive and Well Paul Hardwick Director & Head of Hotels 2016 fell short of the previous year in terms of transaction volumes, albeit this is perhaps a reflection of the exceptional levels of activity witnessed in 2015, rather than a sign of market deterioration in 2016. Furthermore, some players were distracted whilst digesting the fruits of their previous harvest. Of course, the referendum caused Majestic Hotel Harrogate, Cairn Group a brief hiatus, although any blip in activity located branded hotels providing 229 Cairn Group, continued on the expansion has seemingly passed, the last nine months rooms, off a guide price of £12 million, trail with the acquisition five hotels out or so witnessing significant activity across all reflecting around £52,000 per key and, of of the Hotel Collection portfolio off a of the leisure property sectors. course, Marriott International completed its guide price of £75 million, reflecting modest acquisition of Starwood Hotels & approximately £113,000 per key. The Hotels witnessed two portfolio investment Resorts, creating the world’s largest hotel group now comprises approximately 3,000 transactions, both involving Travelodge. company in a £13 billion merger involving bedrooms spread nationally. Secure Income REIT acquired a portfolio around 5,700 hotels with 1.1 million rooms of 55 Travelodge investments for around across 110 countries. Whilst activity has perhaps been a little £200 million, reflecting a net initial yield of subdued at the time of writing, there is around 7%. This was followed a month later a competitive pool of well funded ready by Mansford’s acquisition of the Booking buyers across the spectrum. There are Portfolio of 17 long leasehold Travelodge The referendum caused a several opportunities already in the market, investments for a shade over £28 million, brief hiatus, although any in addition to a steady flow of unsolicited again reflecting a net initial yield of 7%, acquisition approaches opportunities will approximately £48,000 per key. Both blip in activity has seemingly also arise as recent and buyers gradually transactions appeared to offer value to passed. consolidate and rationalise their estates. the buyers, pricing reflecting a substantial There are certainly the right ingredients for discount of c. 25% to returns often an active year. witnessed for the Travelodge covenant and for assets offering long term, upward Following a major £101m refinancing, only RPI linked income with strong trading Newcastle based hotel and bar operator, fundamentals. September also saw Singha Estate and Fico Corporation acquire three provincially Redworth Hall Durham, Cairn Group 4 Hotel Review Issue 17/01 fleurets.com Preparing to sell your hotel Lesley Watmough Divisional Director As an agent, I receive frequent telephone calls from hotel owners and operators who are thinking of selling. As part of this preliminary consultation, I advise clients how to ready themselves for the sale, and here are some of the key aspects. My first piece of advice is to relax! They say Staffield Hall Country Retreats, Penrith that selling a property, changing jobs and available, number of rooms, restaurant it is an existing business TUPE (Transfer of getting divorced are the three most stressful covers, private accommodation, location, undertakings, Protection of Employment) events in a person’s life. For most hoteliers, photographs and floor plans. It is also will apply. A purchaser will want to see a list who reside in their hotel, they are tackling important to have up to date accounts, as of current employees, the hours they have two of these events in one go. Thinking and potential purchasers will want to understand worked and length of employment. planning ahead helps take away some of the the businesses turnover and profit figures. stress, however by hiring a specialist hotel A purchaser will then make an assessment agent you will be in safe hands. of whether the current asking price makes this a realistic proposition for them. If it Purchasers want to see Make sure you are aware of any tax is a high turnover business, with multiple occupancy rates, room rates implications or liabilities. Always check with sources of income, it would be useful to your accountant so you know the cold facts. provide a split on income from rooms, food and additional information How much money you will net after paying and beverage. Ideally, purchasers want which will help them analyse tax liabilities and fees? Take realistic advice, to see occupancy rates, room rates and the business as there is no point building your dreams additional information which will help them and plans on unrealistic figures only to find analyse the business and decide if they can yourself frustrated and having to adjust take it to the next level. your aspirations. There are various other reports which are If bank funding is likely to be required, a required, and it is better to plan ahead In order to create a sales brochure that good degree of reliable financial detail might rather