Investors pour £5bn into buoyant UK hotel industry

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Hotels have become attractive thanks to an influx of visitors (Source: Getty)

Investors plowed £5bn into the UK's hotel sector last year, as the industry rode high on an influx of visitors.

More than half of the interest came from foreign investors, according to global property adviser Knight Frank.

The high level investment marked a whopping increase of 35 per cent on the previous year.

Julian Evans, head of hotels and leisure at Knight Frank, explained that the rapid growth was "underpinned by the strong boost in tourism and increased overseas investment, which we expect to continue into 2018".

Last summer brought more tourists to the UK than ever before, and visitors upped their spending.

Read more: World Tourism Day 2017: Travel industry backs London

The shifting and breakup of portfolios also contributed to the increase in activity, putting more single high-value assets up for grabs.

While Knight Frank predicted that an uncertain climate could lead to a slower rate of investment this year, Evans said the UK's hotels were still seen as a strong investment.

"We predict that we will also see infrastructure funds and global investors start to acquire UK hotel portfolios as seed platforms for REIT targets, as they recognise the secure long-term income and covenants offered by the sector, with net initial yields currently at their lowest level on record, and that the debt market will therefore remain highly competitive in the year ahead."

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