Commercial Property Blog: The hotels market in the South West is buzzing8th November 2013

This summer’s hot weather and a generally upbeat business mood have created a real buzz in the West Country’s hotel market. Sales transactions have risen 28 per cent in the past year as the hotels and leisure market has finally begun to shake off the effects of the Olympic summer that never was.

There is no doubt that 2012/2013 has seen many more hotels being sold in Cornwall and the South West compared with the previous year. The majority being private sales where owners allowed them to be marketed at the correct asking price.

Colliers International has sold 91 hotels and hospitality businesses worth £150m over the past year alone – with many of the deals set in motion months before reports of returning confidence in the sector being taken seriously. A number of key sales were in the South West and there are more on the way proving the sudden surge in demand is no summer flash in the pan.

But buyers need to be careful not to miss out as properties – and prices – have begun to move forward once again. There is good demand from private and corporate buyers looking to invest in quality assets and locations across the South West. Enquiries have been strong all year but there is always a peak at this time of year as people return from their holidays full of enthusiasm.

Consequently viewing rates have soared and buyers are finding that properties are now much less likely to sit on the market and that they need to get cracking.

The Astor Hotel on Plymouth Hoe – made famous by TV’s the Hotel Inspector - was sold by Colliers International for twice the price previously estimated by a competitor.

The Camelot Hotel in Bude, Cornwall was bought out of administration by local businessman Wayne van Rensburg for an asking price of £695,000. The sale of this 24-bedroom hotel, overlooking the Bude Golf Course and within a short walking distance of the town and beach, was followed by a £1.6m refurbishment and relaunch in May which created 20 new jobs.

What’s significant here is that South West sales are from across the hospitality spectrum. The Astor Hotel on Plymouth Hoe, The Camelot Hotel in Bude, The Luttrell Arms in Dunster and Lynton Cottage in Lynton are all completely different business propositions serving diverse sections of the market.

B&B Fact File

• VAT – For turnovers up to £77,000 there is no VAT to pay and even up to a turnover of £150,000 you can choose to go on the Flat Rate VAT Scheme which means a flat rate of 10.5 per cent for a B&B business. You are also allowed various larger one off sums per year to deal with refurbishment, so it is flexible too.
• Staff – Often part time, occasionally self-employed. Often the only help an owner needs is with the cleaning. Most owners will get help with their website, accounting etc., which all goes to keep the wage bill down to a minimum.
• Websites – The cost of building a website is a lot less than it used to be, indeed a day course can often be all you need to get a basic site up and running.
• Associations – There is usually a regional or local association to help you network with other B&B owners. Good examples include the B&B Association, The Bath Independent Guest House Association and The Cumbria Tourist Board.
• Roadmap - Colliers International produced a Roadmap for buying a business and that is available on the Colliers website. It is not a definitive guide but the general message is that there are people out there to help you realise your dream and never feel that you cannot pick up the phone.
• Legals - You are buying a business, however small the turnover might be, but specialist solicitors recognise that you are not buying ICI and can tailor a package to suit. 
• Finance - It would be wrong to suggest it is easy to raise a mortgage in the current climate, but there are some specialist lenders out there who do love the B&B and small hotel sector. The key is packaging the application correctly, ensuring that there is good communication with the lender and that the information they need is gathered efficiently.

Hotel and B&B Opportunities
North Cliff Hotel in Lynton ( £795,000 freehold), an elegant and substantial property in a prime trading location returning £63,435 on turnover of £137,555.
17th Century grade II listed Lifton Hall Hotel, Lifton, Devon (offers invited around £850,000). Turnover £351,649 net of VAT with adjusted net profit of around £90,000 - good mix of lifestyle and profit.
Barclay House in Looe, charming hotel and cottage complex in approximately 6.5 acres with a dozen letting bedrooms, swimming pool and gymnasium. Turnover in excess of £500,000 net of VAT.

All available through Simon Wells at Colliers.

About the author
Simon Wells sells hotels, B&Bs and pubs with Bristol-based Colliers International @ColliersIntl