Confidence returns for hotel and leisure construction sector

Confidence is returning to the hotel and leisure construction sector following the pandemic-induced declines experienced over the past 18 months. Hotel and leisure construction work starting on-site during the three months to August increased by 156% compared to 2020 figures, with the total value of work worth £1,318 million. While the performance was still 31% behind 2019 figures, the uptick will be welcome news for firms working within the sector. Major projects (over £100 million in value) were largely responsible for the uptick with £505 million of work starting on-site during the three-month period.

Contract awards up

Projects with a value under £100 million experienced a very strong performance during the period, with contract awards rising by 93% compared to 2020 figures, and by 21% compared to the previous three-month period to total £1,192 million. Projects with a total value of over £100 million contributed £115 million to the sector, beating the performance of both 2020 and 2019 figures.

Planning approvals drop

Detailed planning approvals in the sector took a 45% knock compared to the same period in 2020 and dropped by a quarter compared to 2019 figures. Total sector approvals contributed £983 million to the sector, with projects under £100 million taking the lions share with £873 million worth of approvals, which was a fifth lower than the previous three-month period.

Hotel and leisure construction projects starting on-site

Sports facilities took the bulk of hotel and leisure construction starting on site during the three months to August period with all projects adding a total of £603 million to the sector, accounting for 46% of the sectors’ project-starts. The majority of this figure was due to work staring on-site on the new £505 million stadium for Everton Football Club (Project ID: 16334343) at Bramley-Moore Dock in Liverpool. The project, which is part of the Liverpool Waters Masterlead (Project ID: 07103751) is expected to create 8,136 construction jobs and will take three years to complete with Laing O’Rourke at the helm as main contractor.

Indoor leisure facilities accounted for 9% of all new work starting during the period with all projects adding £114 million to the overall sector – a 106% uptick compared to 2020 and 22% up on 2019 figures.

Hotels accounted for a third of sector project-starts with all projects adding £453 million to the sector – an uptick of 87% when compared to 2020 but a decline of 22% when compared to 2019 figures.

Cinema and theatre work starting on-site fell 37% compared with 2020 and 83% against the same period in 2019 adding just £24 million to the sector.

Café, restaurant, and fast-food outlet project-starts experienced the poorest performing period, dropping 71% against 2020 and 76% against 2019, adding only £14 million to the overall sector.

Regional performance

The North West experienced the strongest performance out of all the regions in terms of project-starts, with all projects starting on-site contributing £664 million to the region, largely due to the previously mentioned Everton Football Club stadium. The project helped the region to experience upticks in value terms of 588% against the same period in 2020 and 470% against 2019 performance.

Projects starting in London improved by 150% when compared to the same period in 2020, contributing £342 million to the sector. Performance was boosted by the commencement of work on the £230 million Marylebone Lane Hotel (Project ID: 17193212) which will deliver a new 199-bedroom luxury lifestyle hotel on the site of the former 1970’s NCP car park on Welbeck Street. The hotel, which has been designed to achieve a BREEAM Excellent rating, will also feature multiple restaurants, a rooftop swimming pool, and a subterranean event space.

All other regions, with the exception of Yorkshire & the Humber, accounted for much smaller shares of project-starts for the sector.

Glenigan customers can view all sector and regional performance analyses in your Insight pages.

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