Europe -  Birmingham, United Kingdom

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Birmingham suffered as a result of the decline of the manufacturing industry and the rise of new technology in the 1970s and 1980s, but soon recognised the urgent need to diversify its economy and move away from a perceived reliance on this industry. Today, Birmingham is an established UK conference and events market with a full calendar of events, as well as a key regional corporate market. Additionally, a number of financial services and firms in other sectors continue to expand, including the arrival of HSBC’s new UK retail headquarters.

The city and surrounding region have benefitted from a large amount of foreign direct investment from the EU and other private organisations, as well as from strategic central-government-backed spending on various schemes, including the redevelopment of Birmingham New Street Station and the new Library of Birmingham. The city managed to build on its increased exposure through the Rugby World Cup in 2016 and doubled the share of overnight guests in three years to 45.0%. The increase in visitation was fuelled by the leisure segment, attracted by the growing cultural offer. Birmingham has recently been named as host city for the 2022 Commonwealth Games, the first in England since Manchester in 2002.

With a runway extension at the airport in 2014 and the much talked about HS2 project on the horizon (expected by 2026), connectivity to the city was and will be further improved. 2018 saw an overall decline in passengers of 4.2%, derived from international passengers owing to the loss of Monarch Airlines which was Birmingham Airport’s third-largest carrier (1.5 million passengers a year) when it went into administration in October 2017. However, the airport forecasts more than 15 million passengers a year by 2020. MICE demand is also strong, and the Birmingham NEC, close to the airport, is able to compete with other large UK exhibition centres thanks to major events such as the Spring Fayre, the Autumn Fayre and the Caravan Show.

This increased volume is also reflected in hotel performance whereby marketwide occupancy grew from the mid-60s in 2009 to the mid-70s in 2018. Meanwhile, after three years of steady growth above 7.0%, average rate grew by just 2.0% in pound sterling terms in 2017 and 2.5% in 2018.

The city is not a luxury hotel market; however, there is a growing appetite for higher-end hotel accommodation in the city centre. The Grand Hotel (recently bought by Covivio through the Principal Portfolio) is expected to open in June 2020. Around the airport, the 178-room Hilton Garden Inn Birmingham Airport opened in September 2018 and the 225-room Moxy Birmingham NEC hotel is expected to open in December 2019. Following the acquisition of the NEC Group by Blackstone, we understand that there are plans for at least three hotel developments in and around the area. In the city centre, a large proportion of future projects in Birmingham are on hold or speculative (2,500 rooms).

Recent transactions in Birmingham include the Travelodge Central Moor Street and the Premier Inn Birmingham City Centre. In December 2018, CBRE Global Investors acquired the 88-room Travelodge Central Moor Street, subject to an operating lease, for £9.6 million (£109,000 per room) from Aprirose Investments. Standard Life acquired the 152-room Premier Inn Birmingham City Centre for £26.5 million (£174,000 per room) from Cannock SP in August 2017. Several other assets also traded in 2018 on either a single asset or a portfolio basis (the Hallmark Birmingham City and The Grand Hotel), showing the elevated investor interest in this market.

The widespread impact of the coronavirus (COVID-19) has had an unprecedented impact on hotels and hotel values worldwide. Consequently, the latest HVI analysis may no longer reflect the most current measure of lodging industry strength or the hospitality investment market.

In each of our offices across the globe, we are working tirelessly to analyze the impact of recent events and provide timely insights to help you navigate these uncharted waters. Because it is unclear how long the pandemic will last or how long related restrictions will be in place, we are updating our analyses on a weekly basis using the most current data.

Additionally, examination of value trends in prior cycles can provide useful information. Historical patterns, together with an understanding of the market’s current expectations for the eventual recovery of the industry and its performance, can provide insights on the likely trajectory of decline and recovery for hotel values.

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For more information, please contact:

Sophie Perret, MRICS, MBA
[email protected]
  • +44 20 7878 7722 (w)
Magali Castells
[email protected]
  • +44 20 7878-7710 (w)
  • +44 7 850205149 (m)