Edinburgh ranks top in UK Hotel Market Index 2024

Edinburgh has been awarded the top position in Colliers’ annual UK Hotel Market Index (UKHMI) due to its strong performance in both occupancy and average daily room rate (ADR) during 2023. 

According to the index, Belfast has retained its position as second place, primarily due to its significant RevPAR growth in recent years, with a compound annual growth rate (CAGR) of almost 11% for the period between 2019 and 2023.

After its initial entrance within the top 10 during the 2023 index, Inverness has now firmly established itself in third place. This growth is supported by the “increasingly strong appeal” of Scottish destinations to visitors which has resulted in solid performance metrics, together with a limited pipeline under construction and favourable build and land costs. 

Marc Finney, head of hotels, resorts and consulting at Colliers, said: “The data in our third annual report reveals the ever-evolving nature of the UK hotels market. Our Index is formulated in such a way that high land and construction costs and sluggish hotel market growth are penalised. That’s why some markets will rank lower than expected.

“Of course, this is a general market index and site-specific factors, and market conditions will lead to significant variances. What has been interesting to note this year has been the shift back to the city break as opposed to the countryside staycations which were popular during the pandemic. We’ve seen Manchester and Liverpool climbing back up the ranks in our latest analysis.”

The top ten markets as per the 2024 Colliers’ UK Hotel Market Index are Edinburgh, Belfast, Inverness, York, Oxford, Manchester, London, Glasgow, Liverpool and Bath.

While London has slipped two spots due to a combination of high land prices and limited RevPAR growth against pre-pandemic levels, 2023 marks the return of city destinations, with both Manchester and Liverpool climbing back into the top 10 and Glasgow maintaining its position as number eight.

Bath has dropped down the ranks by seven places from last year. Although a strong market, this decline can be attributed to lacklustre RevPAR growth in 2023. This reflects the diminishing staycation market across the UK, with similar domestic-led, leisure destinations such as Plymouth, Bournemouth and Brighton also losing positions within the index.

The research is compiled from analysis of nine key performance indicators (KPIs) including land prices, build costs, room occupancy, average daily rate, room occupancy rates, four-year RevPAR trend, and active pipeline as a percentage of current supply. The ratings are then consolidated and ranked to show which markets are desirable locations for investors to acquire an existing hotel or develop a new one.

Yvan Gravier, consultant in Colliers’ hotels advisory services team, who analysed the data, added: “This report helps us to provide the right advice for investors looking to expand their portfolios in the UK, taking into consideration the local challenges and prospects for the market. 

“In 2024, we anticipate that the shift away from staycations will contribute to softening performance in local leisure-dependent markets like Plymouth or Cardiff, while the full return of Asian and particularly Chinese travellers is expected to bolster internationally driven destinations such as York or Belfast.”

Gravier continued: “However, geopolitical tensions and potential conflicts in regions like the Middle East may pose uncertainties on international tourism, though growth is anticipated from middle-class travellers in Europe and North America, as well as affluent consumers in emerging economies like India.”