18th December 2017

RBH predicts a year of strong industry growth, portfolio deals and the rise of third party management deals

As 2017 comes to a close, business is booming in the UK hotel sector. Despite ongoing Brexit negotiations and the perceived uncertainty they have brought, guests and investors have continued their love affair with the UK - flocking to London and beyond. Exactly what 2018 will bring for the industry remains to be seen. Andrew Robb, Chief Business Development Officer for RBH , reveals his own predictions for the sector in the year ahead.

The UK's leading independent hotel management group has seen its portfolio grow rapidly during 2017 - by around two thirds. RBH now operates more than 75 hotels, compared with 45 at the start of the year. Working with brands such as IHG, Hilton, Accor, Marriott and Wyndham, the RBH portfolio unites around 11,000 rooms across the country including strong presence in both London and Edinburgh.

RBH ends the year on a high, having been appointed to manage the 26 luxury hotels purchased by Aprirose in a £525 million deal with QHotels in late September - a significant deal that could have caused some businesses to take their foot off the gas and coast into the New Year.

However, RBH continued to strive for success, with openings for Hotel Indigo Cardiff and Courtyard by Marriott Edinburgh West - alongside the announcement of a new contract for Hampton by Hilton Manchester Northern Quarter - hot on the heels of the QHotels deal.

This portfolio growth means Andrew is positive about the coming year from a business perspective as well as an industry-wide point of view.

He said: "This year proved, against all odds in terms of the political climate, to be a buoyant year for the hotel industry - and RBH's own success is an example of just how the sector has grown. Deals have been done with confidence and the strength of other currencies against the Pound has ensured levels of inbound tourism have remained strong, while driving people in the UK towards staycations.

"Next year, I believe the UK hotel market will continue its strong growth. North of the border, I personally would like to see a change in fortune for Aberdeen, but on a wider scale, and following strong growth for RBH-operated hotels in 2017, I believe that the 2018 revenue per available room throughout regional areas of the UK - outside of London - could grow by as much as four per cent. London itself will also do well, if a little slower, with a growth of around three per cent."

Over the years, Andrew and the RBH team have seen significant shifts in the hotel operating landscape following transaction activity, and he believes 2018 will see this trend continue.

He said: "A number of hotel portfolios were sold in 2017 including The Hotel Collection and QHotels with a deal just concluded on the Jurys Inn chain. As we move into 2018, a number of large deals are set to conclude - the Principal Hotels portfolio among them.

"Numerous investors are viewing these portfolios, as well as other imminent opportunities, and recognising the significant benefits of engaging with third party operators such as RBH. Employing third party management can result in significant cost reductions in central overheads, improved trading and profit margins and a huge focus on adding value to each asset through repositioning and rebranding.

"It is clear to see that within these large portfolios there is no 'one size fits all approach' in terms of strategy and sometimes an investor may wish to dispose of certain non-core assets - we offer flexibility in our contracts to support this."

When reflecting further on the past year, Andrew said: "RBH's biggest achievement of 2017 is growing our management team with the addition of some excellent people. Our commitment over the last few years to getting the right support structure for our hotels and our owners is paying dividends. I am excited about the opportunities and challenges which 2018 will bring RBH and the wider hospitality industry - I'm sure there will be plenty to talk about as the year progresses."