Councils pile into hotel sector
0Local authorities in Britain have spent £93m on hotels in 2018, up 182% on the previous year, according to new research.
A report by property consultant Knight Frank said councils are taking advantage of low-interest loans from the Public Works Loan Board, a statutory body that issues loans to local government.
Long leases and ground-rent investments in the hotel sector are providing them with long-term secure income to help to fund services, it said.
Shaun Roy, head of hotels at Knight Frank, said: “With the growing acceptance that councils need to seek new means of funding to cover budget shortfalls, we have seen many local authorities make the intelligent move of investing in hotels.
“By investing in hotels, the council receives rental income generated by these assets, which offer a secure, long-term income stream, with inflation linked cash flows, combined with an increase in the underlying property’s value over an extended period of time.
“These are a strong option for councils as, unlike investment in offices and retail, no asset management is required, as they are managed by their operators.”
