More hotel groups could be broken up and sold off as smaller packages and individual sites this year as the economic crisis continues to bring about challenging market conditions.
The average value of properties in the hotel sector dropped 18 per cent last year and there is little sign of values moving upwards in 2009 according to predictions in Christie & Co’s Business Outlook 2009.
However, Jeremy Hill, head of hotels at Christie & Co, predicts a year of opportunities for smaller operators as more hotel companies, similar to Folio Hotels, fall into administration.
He said: “The end of the year brought the first signs that the economic slowdown and the subsequent drop in trading would leave some companies struggling to stay afloat.
“Folio Hotels, which operated 36 properties across the UK, fell into administration at the star of December, albeit the majority of its hotels have been successfully transferred to new owners. More businesses are unfortunately set to follow, as banks look to sell underperforming assets, in order to balance their pressurised books.”
Hill said international hotel groups with strong brands and a sustainable operating model such as Hilton were in the best position to survive the downturn and could also take advantage of ‘quality opportunities at reduced prices.’
The report also predicted a tough year for the restaurant industry, which saw property values drop 15 per cent last year.
Head of restaurants Neil Morgan said although the casual-dining sector had managed to remain robust through the latter end of 2008, partly due to promotional activity, it would come under pressure from takeaway and fast food outlets.
He said: “We believe that the next 12 months will prove tough for all operators, and while we expect the corporate casual dining segment to remain robust through the downturn, helped by strong brand awareness, regional and independent operators will come under increasing pressure to remain competitive.”