Investment activity and revenue growth
Speaking at the 20th Whitebridge Hospitality New Year Hotel Investment Summit, experts highlighted earnings growth across the EMEA region as international investment across markets continued to grow. In the UK, while domestic players saw their share of investments shrink, international buyers - particularly from North America and Europe – gave a strong show.
“Buyers from North America came back with a vengeance and acquired a lot of stock. European buyers consolidated their market leading position and grew their share again in 2024 to just over 50 per cent by value. Although Brits bought many hotels, those hotels tended to be small and the big deals were all done by bigger international buyers,” said Philip Camble, director at Whitebridge.
Turning to investor types, sovereign wealth fell away dramatically as Middle East and Asian investment dropped to historically low levels, Camble said.
And London and regional markets in the UK also had a great year, experts noted, adding that in 2025, the capital is expected to see strong earnings growth in 2025 with Camble predicting a revpar increase of up to 5 per cent and noting robust activity from hotel companies, with owners and operators acquiring hotels particularly across Spain and regional UK.
Michael Grove, CEO at HotStats shares this optimism for the UK where secondary cities such as Nottingham and Leeds are emerging as growth markets.
“Edinburgh has seen pretty amazing growth. Looking at conference and events, we see growth in markets like London, Birmingham and Glasgow, with the picture for key cities looking very strong. Nottingham is number one on the list of secondary cities, with Leeds in second place.”
Creative strategies to boost profit
However, he stresses the importance of creative strategies in order to combat challenges such as increased costs moving forward as ADR growth starts to slow, noting that labour remains a key challenge across Europe, particularly in the UK with an expected increase in costs of between 7 to 10 per cent.
“We’re expecting to see further wage costs across the spectrum and labour is going to be a challenge in 2025 more than it was in 2024. The challenge will be around how to continue to drive the top line as we see start to see ADR start to flatline. It’s really about getting creative on new revenue streams, new ways of working, new ways of revenue capture and upsell,” he says.
Positively though, he notes that while payroll costs have increased significantly, other costs such as energy have reduced dropped and are significantly lower when compared with 2023, and overall average UK gross operating profit margins have grown slightly on last year.
Moving on to sunnier climes, Camble says that in Venice, revpar is expected to increase by more than 10 per cent in 2025, bolstered by an extended daily tourist fee policy which will be applicable for 54 days up from 2024’s 29 days. Grove also spotlights Madrid, highlighting significant profit growth in the Madrid market over the last three years and expressing positivity in the city’s performance moving forward.
Looking at volume of distressed deals by value, Camble noted a significant uptick in 2024.
“Western Europe has been particularly busy in trying to clean house, especially in Italy and in France.”
Going even further out, Grove notes that the Middle East continued to go from strength to strength from a profitability perspective, with 8.2 per cent growth both in profit and in revenue.
“Normally, it’s mainly driven by Saudi Arabia and the UAE but revenue growth has been much more muted than it was in prior years, with a lot of growth actually coming from Kuwait and Bahrain. Looking at the direction of travel we have going into 2025, European numbers and the Middle East numbers are still on a positive trajectory so we’re starting the year with some positivity.”
By Ifeoluwa Taiwo
