Retail Property Insights

Hotels enjoy strong post-Pandemic growth

23rd August 2023

UK hotels have enjoyed strong growth in both revenue and occupancy rates since the Pandemic, research from Knight Frank has found. The real estate agency found that occupancy rates at London hotels reached 82% in June 2023, an increase of 3.2 percentage points (pp) against the previous year. However Knight Frank said that robust seasonal demand and persistent high inflation means many hotel operators are continuing to pursue rate maximisation in lieu of full occupancy recovery, with average daily rate (ADR) increasing 8.5% in June. Upper-midscale and upscale hotels in the capital outperformed the market, with occupancy during the first half of the year increasing by 21pp to 77%, while ADR increased by 15%. London’s select service hotels achieved their highest occupancy performance since before the Pandemic (June 2019) during the first half of 2023, at over 87%. Meanwhile, luxury hotels in the capital proved to be resilient against inflation, recording an increase of 10% ADR during the first half of the year compared to 2019. In regional hotels, occupancy rates increased to 81%, a 4pp uplift against June 2022, with the occupancy margin reducing to 2.8 basis points versus 2019. This, combined with strong ADR growth, led to a 13% […]

London tourists spending less despite increase in visitors

15th August 2023

Tourists in London are spending less money than before the Pandemic, despite a recovery in the number of overseas visitors. Data from the New West End Company revealed that flight bookings from the United States to London were up by 17% in the three months to June compared to the same period in 2019, however the total spent by Americans in the West End fell by 1%. Travel from the GCC (Gulf Cooperation Council) countries was also up in the same period, by 7%, however spending decreased by 17%. Conversely, the data also found that tourist spending in Continental Europe was significantly higher than pre-Pandemic levels, with US spending in France and Spain up by 183% and 174% respectively in the second quarter compared to 2019. Spending from GCC visitors was also higher, increasing by 118% in France and 112% in Italy. The New West End Company said that the discrepancy between visitor numbers and spending was a result of a lack of tax-free shopping.. The UK is currently the only country in Europe which does not offer tax-free shopping for international visitors after the scheme was scrapped following the finalisation of its exit from the EU in 2020. A...

Retail destinations embrace independents since Pandemic

31st July 2023

The majority of shopping destinations have taken on more independent retail since the Pandemic, according to new findings. Research from CACI’s Centre Dynamics Platform analysed a range of shopping destinations including city centres, shopping malls, and regional towns. It found that 38% of regional malls, 31% of outlet centres, and 29% of suburban centres have increased their independent provision compared to 2019. City centres were also found to be a hotspot for independent retailers, with only one across the country – Belfast – having a smaller amount of independent retailers compared to before the Pandemic. CACI’s data also identified a number of regional trends, with 22% of London locations losing independent retailers, the highest national rate. However, London as a whole has seen an increase in independents of around 2%, equating to about 15 operators per destination. Although the capital has the highest number and proportion of independents, other regions have seen a greater amount of relative support for local brands since the Pandemic in the north. Northeastern, Northwestern, and Scottish destinations have grown their independent provision by 32%, 28%, and 26% respectively. Olivia Longmore, senior consultant in location analytics at CACI, said: “There is a clear indication that shopping […]

One in 18 hospitality venues called last orders in the past year

26th July 2023

One out of every 18 hospitality venues closed its doors permanently over the past 12 months, according to a new report. The Hospitality Market Monitor from CGA by NIQ and AlixPartners found that 5,736 venues shut down between June 2022 and June 2023. The 5.4% fall in the number of venues means that Britain had 100,176 licensed premises by the end of June 2023. If this number falls below 100,000, this would be the first time it has dropped to five digits since the monitor began. Over the last year, hospitality businesses have been hit by a cocktail of increased costs, including energy, staffing, and resources. Meanwhile, consumer confidence has taken a knock thanks to high inflation and interest rates rises. However, many of the industry’s problems are long-term and were accelerated by the Pandemic. Since early 2020, the country has seen a decline in the net number of hospitality venues of 14,932. This represents a drop of 13% compared to the pre-COVID total. Smaller businesses have borne the brunt, with 76.5% of net closures since the Pandemic happening within independent businesses. In contrast, the managed sector has seen only 3.7% of venues shut in the same period. There is […]

Investor appetite “remains strong” for pubs

25th July 2023

Investor appetite for pubs “remains strong” despite ongoing industry headwinds, according to a new report. More opportunities will emerge for the pub sector once market conditions improve, advisor Christie & Co has said in its mid-year pub and restaurant review. The firm said that the sector’s resilience is being driven by its “solid headline performance”, underpinned by the public’s “unwavering desire” to head to the pub. Christie & Co said that despite some underlying corporate activity from Stonegate and Whitbread in recent months, the independent market is driving market activity and the firm experienced an increased demand for leasehold pubs. It is not the same story for the restaurant sector, however, which still “remains tough”. Christie & Co said this was particularly difficult regarding leasehold opportunities, with high streets and leisure parks worst hit. The report found that instructions picked up by 19% during the first half of 2023 from a historic low at the start of the year, with a 6% increase in leasehold deals. The firm found that 80% of deals were conducted within the independent market, with cash transactions making up 86% of all accepted offers. There was also a reduction in the time it took for […]

Investor appetite “remains strong” for pubs

25th July 2023

UK consumer confidence drops for first time in six months

21st July 2023

GfK’s Consumer Confidence Index saw a downturn in July, ending a run of six consecutive months of increasing scores. The index fell six points to -30, with all measures falling compared to June. The long-standing index is measured in five categories, which are each given scores. Of those surveyed, opinions on personal financial situation over the last 12 months decreased by five points to -20, while personal financial situation for the next 12 months fell six points to -7. Consumer opinions on the general economic situation over the last 12 months decreased by four points to -58, while feelings about the next 12 months dropped eight points to -33. The major purchase index, which measures consumer likelihood to make larger, discretionary purchases, also fell, recording a dip of seven points to -32. The savings index, which does not contribute to the overall score, was the only measure to increase, up by one point to 26. This may be seen as a reflection of high interest rates putting people off saving and encouraging saving. Joe Staton, client strategy director for GfK said: “For the first six months of 2023, UK consumer confidence improved despite the headwinds of the cost-of-living crisis, with double-digit […]

Hospitality sales failed to capitalise on Coronation as economy shrinks

13th July 2023

The hospitality industry failed to fully capitalise on the King’s Coronation as the economy shrunk by 0.1% in May, the Office for National Statistics has said. The fall in GDP followed growth of 0.2% in April. Over the three months to May, GDP showed no growth. Despite the Coronation bank holiday, sales at pubs and bars saw a fall after a comparatively strong April. Increases in arts, entertainment, and recreation, which were up 1.8%, was offset by a reduction in retail trade, which was hit hard by a 1.4% fall in wholesale trade. ONS director for economic statistics, Darren Morgan, said: “GDP fell slightly as manufacturing, energy generation and construction all fell back with some industries impacted by one fewer working day than normal. “Meanwhile, despite the coronation bank holiday, pubs and bars saw sales fall after a strong April. Employment agencies also saw another poor month. “However, services were flat overall with health recovering, with less impact from strikes than in the previous month, and IT also had a strong month. “Across the last three months as a whole the economy showed no growth.”

Hotel transaction volumes fall 60% year-on-year

12th July 2023

Hotel transaction volumes reached £860m during the first six months of 2023, representing a fall of 60% compared to the same period in 2022, according to research from Knight Frank. The property adviser said the figures represent a larger-than-ever gulf between hotel trading performance and transactional activity. Knight Frank said there had been a “strong recovery” of the trading performance of UK hotels despite the headwinds they are facing. Data from HotStats found that London’s revenue per available room (RevPAR) was 50% higher year-on-year during the first five months of 2023. The data also found that the year-to-date gross operating profit per available room (YTD GOPPAR) in London’s hotels had equalled pre-Pandemic performance. Regional hotels also saw a 20% increase in RevPAR in the first five months of the year compared to the same period in 2022, while YTD GOPPAR is trailing its pre-Pandemic performance by 1.5%. The data revealed that London’s average daily rate (ADR) is tracking above inflation, while ADR for regional UK hotels is on par with 2019 prices. Knight Frank said this resilience is attracting investor sentiment in the sector, especially from those with a good understanding of the sector. The adviser said the appetite to […]

Sun shines on retailers as sales up in June

11th July 2023

Sunbathers and holiday-goers weren’t the only ones enjoying the sunshine in June, as retailers saw improved sales helped by warmer weather. According to the BRC-KPMG Retail Sales Monitor, UK total retail sales increased by 4.9% in June, against a decline of 1% in June of 2022. This was above the 3-month average growth of 4.6% and the 12-month average growth of 4%. Like-for-like retail sales grew by 4.2% in June, against a decline of 1.3% a year before. This fell below the 3-month average increase of 4.3% but was higher than the 12-month average growth of 3.6%. Food sales increased by 9.8%, and were up 10.1% on a like-for-like basis over the three months to June. Non-food sales grew by 0.3% but were down 0.5% on a three-month like-for-like basis. Helen Dickinson OBE, chief executive of the British Retail Consortium, said: “Retail sales growth ticked up slightly in June as hot weather prompted purchases of summer essentials. Sun-seekers headed to their favourite retailers to buy swimwear and beach towels, and outdoor games, garden furniture and barbecue food were boosted as families came together to celebrate Father’s Day. People were much more cautious about big-ticket purchases like furniture and technology equipment....

Retail sales fall for second month running

27th June 2023

Retail sales volumes fell for the second month in a row in the year to June, according to the latest Confederation of British Industry (CBI) Distributive Trades Survey. However, the survey reports that retailers expect sales volumes to stabilise next month. Retail sales volumes declined by -9% in the year to June, compared to a fall of -10% in May, but are expected to remain unchanged in July. Orders placed to suppliers also declined in the year to June (-10%), albeit at a slower pace than in May (-30%). These are anticipated to fall at a similar rate next month (-9%). Retailers also reported the firmest stock positions since May 2020 (+33% in June from +25% in May). Stock volumes are expected to remain higher relative to expected sales in July (+26%). Martin Sartorius, CBI principal economist, said: “Another contraction in sales volumes attests to the difficult trading environment being faced by the retail sector. Households’ finances are still under pressure from high inflation, which means that demand conditions for retailers are likely to remain challenging in the coming months. “Retailers continue to be disproportionately affected by the business rates system when compared to other sectors. There is a real […]

A fifth of landlords to spend half a million pounds to meet EPC standards

27th June 2023

Nearly one in five (19%) landlords have said they are planning to invest at least £500,000 over the next year in order to meet EPC (energy performance certificate) standards, a new study has found. Research conducted on behalf of Handelsbanken surveyed professional investors with an average of 29 properties worth around £14m, and found that over half (55%) planned to invest at least £100,000 on EPC certification. All of those surveyed said they would be spending at least £1,000. The majority (92%) of surveyed landlords expect the value of their properties to increase by at least 5% over the next 12 months. With £500,000 representing around 3.5% of the average portfolio, it is likely many will see the value increase cover investments into EPC. Minimum Energy Efficiency Standards (MEES) were introduced by the Government in April 2018, but from April 1 this year, these regulations were tightened. It is now unlawful for a landlord to let a commercial property with an EPC rating of below E. While over half (57%) of those surveyed were optimistic regarding their commercial properties meeting these standards by the deadline, over two fifths (44%) said they were only moderately familiar with the Government’s plan to...