Queens Hotel in Leeds Pandox c Flickr user Chris Rycroft via CC BY . bit.ly SLASH SBhRNL

The Queens Hotel in Leeds was sold to Pandox for £53m. Does this mean good news for the hotel investment market? Credit: Flickr user Chris Rycroft via bit.ly/3SBhRNL

The Subplot

The Subplot | Hotel hotspots, Liverpool planning, Deansgate

Welcome to The Subplot, your regular slice of commentary on the business and property market from across the North of England.


  • Will spring bloom for the hotel sector, or will frost kill the green shoots?
  • Elevator pitch: your weekly rundown of who is going up, and who is heading the other way


But beware late frosts

Investors cold-shouldered the North’s hotels; now some say the mood seems to be warming. Are we about to witness the return of Big Money or is spring still a long way off?

Does one swallow make a summer? Does one daffodil make a spring? A lot is being made to hang on Aprirose’s decision to offload the 232-bed Queens Hotel in Leeds to Swedish investor Pandox for £53m. For sure, it’s a sign that the Aprirose makeover was successful: a tired provincial roost now looks a lot swankier. Whether Aprirose made much of a return on the investment is another question entirely: it acquired Queens as part of the £525m QHotels deal in 2017, an eye-wateringly expensive buy that Aprirose has been in the process of unwinding since 2021.

The case for sunshine

Cheerful people suggest the deal heralds a return of hotel investment and say the usual cheerful thing, which is that a lack of stock is holding the market back, not a lack of investor will or firepower. They point to the Leeds deal and some others in the South East. But is it true? The volume of transactions hasn’t picked up since the pandemic. Total North West and North East hotel transactions reached £537m in 2019, then fell off a cliff to £204m in 2022, according to CoStar data. In other words, we’re going to need a lot more evidence of activity before the market hits pre-pandemic levels.

Swollen pipeline

Can a legacy of optimistic pre-pandemic development and investment decisions really be shaken off so easily? Take a look at the Manchester hotel scene and you see a market growing like dandelions in the sun: Deloitte figures show 1,504 new city centre hotel rooms delivered in 2022, as much as the years from 2019 to 2021 combined. That’s a lot of reasons for investors to slow-peddle.

Revenue issues

Medium-term hotel spend is estimated to grow by an average of 2.6% a year through to the end of 2028 across the major Northern cities, Savills predicts. However, the firm’s analysis adds that “on a year-on-year basis there will be a fall in real terms,” which isn’t such good news. Revenue per available room – in other words, price adjusted for occupancy rates – is up on pre-Covid levels, particularly in the generally lower-rated markets such as Bradford and Sheffield. Of course, that is growth from a low base. But let’s not be mean: Leeds RevPAR compared to 2019 is up 28% for economy beds, which isn’t bad.

Seasonal chill

It sounds promising which makes it puzzling that corporate investors – those buying into the hotel businesses rather than, or in addition to, the real estate – are so sluggish. A total of 38 global deals (mergers and acquisitions, venture financing and private equity deals) were announced in the sector in January 2023, down 42% when compared to the previous month, said GlobalData. That’s a chilly start to the year.

Weather: mild

So what’s the medium-term forecast? Tom Cunningham, director in the hotel capital markets team at Savills, has a try. “There’s been a big reduction in the transaction volumes. There have been so many reasons not to invest, plus issues in the debt market, but the Queens Hotel sale is positive and there’s more out there. We’ve got £21m-worth of hotels under offer or in exclusivity. It feels steady, but it’s true we’re not pulling up trees,” he tells Subplot.

Green shoots

For now the tone is set by cash buyers on smaller transactions, and investors buying at the bottom because competition for the top lots is still super-strong in the rare circumstances an owner wants to sell. Moods are lifted by a strong return of concert, football and event trade, which floats many city centre hotels. But moods are firmly down for bland mid-market hotels with no unique selling point.

In other words, this isn’t the start of spring for hotel investment. It’s still very much the winter. Beware frosts.


Going up, or going down? This week’s movers

It may be some time before you can stroll safely down the middle of Manchester’s Deansgate. In the meantime, there’s an opportunity for Liverpool’s planning function to recover. Doors closing, going up!

Liverpool planning

Liverpool City Council will have a new chief executive early this summer. Current Cheshire West and Chester Council chief executive Andrew Lewis is set to replace interim chief executive, Theresa Grant, who replaced Tony Reeves. The move comes – if it comes – as the depleted development side of the council’s paid hierarchy is replenished. At the top, Nuala Gallagher from Limerick replaces Mark Bourgeois, who replaced Mark Bousfield, who replaced Nick Kavanagh, who was sacked in 2021.

One tier down, Sophie Bevan has parachuted in from the Liverpool City Region Combined Authority to look after major projects. The city’s planning function is not in a good way: developers and landowners are as unhappy as residents and campaigners at a system suffering from a kind of policymaking rigor mortis. Re-animating the corpse could be hard work.

Deansgate pedestrianisation

The biggest bang for regeneration bucks Manchester has to offer is the pedestrianisation – or boulevardisation – of Deansgate. Are we moving closer? The city council has begun consultations on what to do with £14m from the City Regional Sustainable Transport Settlement. It hopes to transform the long mile that should be the city’s glory.

If you were hoping to see obstacles swept away, you will have been disappointed by the hostile trip hazards and barricades of the new bus lanes. It’s a bad portent and points to the big problem, because real change would involve taking on the bus bosses. Alas, challenging the idea that a bus has to drop people exactly on the doorstep of their preferred destination, or follow exactly the route of a long-defunct trolley bus map, has stymied work at Piccadilly Gardens for decades and will do the same in Deansgate.

Get in touch with David Thame: david.thame@placenorthwest.co.uk

Your Comments

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Re Liverpool planning, don`t just sit back and wait for things to happen, you`ve got to go out and market the place. There are pockets of land in the city centre, some right next to underground commuter stations, that have been empty for around 30-40-50 years, these are on Moorfields, Chapel Street, London Road. Go out and get developers to build accommodation above and commercial at ground level, it works in European cities.
Work with the City Region mayor to build new stations, say at Vauxhall, and combine it with a new neighbourhood mixed with high-rise and town-houses. The opportunities are out there, so grasp them.

By Anonymous

Wait for MCC to make a pig’s ear out of Deansgate like they did Great Ancoats Street. Do they have anyone in Manchester Town Hall with an eye for aesthetics? Put forms all along the centre, with some nice greenery, and line both sides with trees. Why do they need a consultation? Every other European city does that with their main thoroughfare. No bogies, or tacky windmills, or million cotton buds. Simple is best.

By Elephant

Please Pray for Liverpool Planning Department, that they see the light of development and repent before it is too late?

By Liverpolitis

The Hotel sector in Liverpool seems pretty active with new builds and some fine old buildings refurbished and transformed, the new Red Radisson, Municipal buildings and more across the City. How does this compare to the rest of the North?

By Just saying!

Re. Final point – “Bus bosses” often do themselves no favours but suggestion there seems to be that bus passengers expecting to be dropped “exactly on doorstep” of destination is them being somehow unreasonable rather misunderstands fairly big issue. Across much of city and wider GM, bus network is extremely patchy, so getting to the nearest bus stop can be a long walk, and then getting from the place in town, or on the edge, where buses are still allowed, can mean another long walk. MCC has also frustrated cross-city services for a number of years. This can add 40 plus minutes to the length of a journey, in whatever weather, which actively discourages trips into the city centre from much of GM not served by tram or train. It particulary obstructs (or prevents) anyone with reduced mobility, who really do often need to get near to their destination, and often the need for accessible public transport gets drowned out by the advocates of active transport, who seem to think any problem can be solved by walking or getting a bike. And on a slightly nerdy point, the bus network from the 50s up to 80s deregulation was a pretty impressive one, including very central stops, and something taking into account demand for more public space and other ways of getting about wouldn’t be a bad aspiration once bus regulation is rolled out across GM.

By Rotringer

Read that today that the first Task Force meeting involving Sir Howard Bernstein, Steve Rotheram , et al ,takes place, so hopefully Sir Howard can clearly identify one of the major barriers holding Liverpool back, ie the planning restrictions, and get the commissioners to put this right.
Littlewoods Studios, Pall Mall, need to start happening, meanwhile Sir Howard might be able to persuade the private sector to build and manage a new cruise terminal which would be an enormous economic success in terms of future jobs not just in shipping but in hotels and other leisure associated areas.

By Anonymous

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