John Griffiths, head of office for Jones Lang LaSalle, Birmingham, outside the Hyatt Regency Birmingham - subject of the largest regional single-asset sale outside of London.

Birmingham achieved the highest UK growth in hotel room yield in 2002, according to Jones Lang LaSalle's latest European digest.

Among the 23 cities monitored by the digest, Birmingham led the field with more than five per cent growth in yield to roughly 64 euros. Birmingham was also the hot-spot for the UK hotel property market.

The largest single-asset sale in regional UK involved the Hyatt Regency Birmingham, followed by the Crowne Plaza Birmingham.

"These two transactions underpin the future of Birmingham as an established hotel investment market," says John Griffiths, head of office for Jones Lang LaSalle, Birmingham.

"Investors were attracted by the development of Birmingham as a destination. They are expecting both the corporate and leisure segments to grow in the medium term but are heartened by the resilience of the trading market when compared to gateway cities such as London."

Birmingham saw a high comparative percentage increase in occupancy levels last year, particularly in September when it hosted the Ryder Cup.

Strong trading was supported by high levels of business and conference demand generated by the NEC and the ICC, particularly in the last quarter of 2002.

As a result, there was significant growth in room yields, supported by strong average room rates and higher occupancy levels.

Several major regeneration projects in Birmingham ? the latest including the Bullring, the largest retail development in Europe ? have gone some way to redressing the balance between Birmingham's weekday and weekend visitor demand. Six other UK cities showed growth in room yield, including Cardiff and Edinburgh.

Trading growth in these cities in 2002 was partly a result of all markets recovering from previous periods of over-supply in the late 1990s and up to 2001.

This has now been absorbed, so that growing demand is reflected in room-yield increases.

Demand has also returned after the foot-and-mouth epidemic in 2001, and it has been supported by the boom in budget airlines.

The regional UK investment markets fared generally better than London, with representation in the key cities remaining important for the major UK operators.

Last year saw more interest in the regional UK markets from international investors but, according to Jones Lang LaSalle, this interest remains confined to large, branded hotels, mostly in major regional centres.

Domestic purchasers mainly dominated the sales that took place, although Edinburgh, a key financial centre, remains a strategically important city for investment.

The medium-term outlook for UK cities, including London, is relatively positive since they benefit from relatively restricted supply pipelines, which should ensure stable trading until the high-spending US tourists return.

"This will be is almost impossible to predict in the current global climate," concludes Mr Griffiths.