Is Seaside Hotel Investment the New Buy-to-Let?

With the UK enjoying record visitor numbers last year, the seaside hotel investment sector could be the new buy-to-let…

Visit Britain reported 37.6m visitors over the course of 2016 – up by 4.14% on 2015.

Meanwhile, travel marketing firm Sojern has recorded a 23.8% rise in the number of Britons planning a UK summer break for 2017, with Brexit believed to be a key influencing factor in many families’ decision to opt for a UK staycation.

This is excellent news for the seaside hotel investment sector.

Is Seaside Hotel Investment the New Buy-to-Let?

Is Seaside Hotel Investment the New Buy-to-Let?

The CEO of Property Frontiers, Ray Withers, says: “UK hotel rooms are hot property right now when it comes to investments that offer impressive returns. They outshine buy-to-let in several ways – there’s no Stamp Duty, no buy-to-let tax issues and a comparatively low entry point. For investors from overseas, there’s also the ongoing favourable exchange rate, with the pound not yet fully recovering from the UK’s decision to leave the EU.”

While the pound has recovered somewhat since last year’s EU referendum, it is still 16% lower against the dollar and 14% lower against the euro than it was before the vote. Many investors are taking advantage of this to increase their stock of UK hotel rooms, with returns of around 10% tempting many to opt for these instead of buy-to-let opportunities.

Savills reports that seaside hotel investment has already reached £2 billion in the first half of 2017. If the firm’s projections play out, investment for the year will hit £5.1 billion – an increase of 28% on 2016.

Scarborough in North Yorkshire is an excellent example of a UK seaside town enjoying a significant revival. According to Visit Britain, the county as a whole experienced a 4.56% rise in tourism in 2016, with a 15.52% increase in total visitor expenditure.

Scarborough’s majestic Harland Hotel is one of those properties reaping the benefits.

From its commanding position overlooking Scarborough’s south bay, the Harland offers rooms for investment from £60,000, with 10% net income for the next decade. Then there’s a 125% defined buy-back option.

Withers comments: “The Harland Hotel is precisely the kind of location that investors are seeking out in the UK. Investors are keen to tap into this increasingly lucrative market. At a time when other types of residential investment are being squeezed in terms of the profits they can offer, seaside hotels offer an exciting opportunity to take advantage of a range of market conditions.”

The story is the same in Woolacombe, North Devon, which was voted Britain’s Best Beach by TripAdvisor for 2015 and 2016. Domestic and international investors alike are snapping up rooms at the Atlantic Bay Hotel, as the ongoing potential of the British seaside tourism market becomes increasingly apparent.

A survey conducted by CBRE earlier this year found that the UK has the most appealing seaside hotel investment market in Europe.

Miles Gibson, the Head of Research at the CBRE, explains: “Brexit will take time, but the wheels of the economy will still turn, and there is no doubt that the UK’s particularly strong economic fundamentals will further underpin investor confidence in purchasing UK property.”

Visit Britain projects that the UK tourism sector will grow by 3.8% between now and 2025. As tourism growth continues to outpace that of the country’s overall economy, the seaside hotel investment sector looks set to continue being one of the main beneficiaries.

Are you ready to leave the buy-to-let sector for something sunnier?

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