James Broadhurst writes for Costar on why hotel franchising is a smart play for investors

The hotels sector is no doubt facing headwinds. The increase to National Insurance Contributions and National Minimum Wage outlined in the 2024 Autumn Budget presents significant challenges to a labour-intensive sector. So does the anticipated revaluation of business rates in 2026, which will impact hotels considerably given their prime locations and large property portfolios. And, just, a few weeks ago, amendments to the Employment Rights Bill were also announced which is another significant challenge that could substantially inflate operational costs given the degree to which many hotels make use of flexible employment contracts.

Given all of this, you’d perhaps be forgiven for looking at hotels with a degree of pessimism. But actually, the outlook is largely positive. There is still a huge amount of buoyancy and opportunity in UK hotels, much of it being driven by innovations amongst hoteliers and developers as well as investment trends, and we are seeing sustained interest in the asset class that shows no signs of recession.

As investors increasingly diversify their investment portfolios, hotel investment is a compelling opportunity. The franchising model, in particular, offers a unique blend of brand strength, operational support, and risk management that is difficult to replicate in other real estate and hospitality models. It positions investors to capture upside in a changing market while mitigating many of the risks associated with independent hotel ownership.

In an article for Costar, James Broadhurst, Corporate Partner, outlines why hotel franchising is a smart play for investors.

In the article he covers:

• Why is it so attractive?

• Understanding franchise agreements

• Outlook for hotels

Read the full piece in Costar here (subscription required).