Hotel and leisure construction on the rise

The revival in hotel & leisure-related construction work seen over the past year is set to continue into 2025 and beyond as developers respond to the growth in tourism and improving consumer spending.

Following a 19% increase in the value of underlying hotel & leisure starts this year, the new Glenigan Construction Industry Forecast 2025-26 predicts a 6% rise in starts in the sector next year and a further 9% growth in 2026.

The upturn reflects an improving work pipeline in the sector with detailed planning approvals for hotel & leisure projects rising by 4% in the third quarter of this year to stand 35% higher than a year earlier.

Construction work on hotels & guest houses is one of the most promising areas for new work as accommodation is expanded and modernised to cater for growing visitor numbers.

According to figures from the tourism agency Visit Britain, room occupancy in England has been higher in every month this year compared to 2023, with a peak occupancy of 85% seen in July. Overall, in the year to date to October, room occupancy stood at 78% across England up from 76% in the same period last year.

A growing number of overseas tourists has helped hoteliers keep their rooms full. Last year, 38 million international visitors came to the UK, up from 31.2 million in 2022. Yet this was still below the pre-pandemic level of 41.1 million seen in 2017, suggesting there is still ample growth potential in the market.

Glenigan data highlights the wide range of hotel & accommodation projects where construction work is due to get underway.

One flagship project in London where work is set to start next spring is a £192.7 million, 31-bed hotel for Grosvenor Group which forms phase 3 of its South Molton Triangle development in Westminster. Detailed plans have been granted on the project which is at the pre-tender stage but where BDP has recently been appointed as the landscape consultant (Project ID: 23120621).

Elsewhere in the capital, tenders have been returned and work is also due to start next spring on a £19.4 million hotel project at 9 Bridewell Place in the City involving a change of use from office to hotel use across a floor area of over 1,500 sq m (Project ID: 22457276).

Hotel refurbishment projects are generating work in various tourism hotspots. In Bath, detailed plans have been granted for a £13 million scheme of alterations at the Francis Hotel in Queen Square with work set to start next April (Project ID: 24145930).

Meanwhile, at Linton Lodge Hotel in Oxford, work is due to start in the spring on a £16.2 million reconfiguration of the facility to provide 42 bedrooms, a function space and landscape improvements. Detailed plans have been granted on the scheme which is at the pre-tender stage (Project ID: 11370817)

Smaller hotel & leisure schemes catering for tourists are also in the pipeline. Planning conditions are currently being resolved on a £6.5 million hotel/leisure project at The Old Ship Hotel in Brighton where work on a remodelling and extension scheme is pencilled in to start in the new year (Project ID: 07556721).

Meanwhile, work on some major flagship projects around the country is also set to buoy up activity in the wider hotel & leisure sector next year.

Lendlease is due to start construction work on The Sage International Conference Centre in Gateshead (pictured) early in the new year. The £150 million project involves a hotel and arena facilities across more than 61,000 sq m of space and has benefitted from £20 million of Levelling Up funding (Project ID: 06021815).

Meanwhile, detailed plans have been submitted for a new hotel and stand as part of the £20 million Edgbaston Stadium Redevelopment which will create a mixed-use destination around the Birmingham cricketing landmark. Work on the project is due to start next year and run for 19 months (Project ID 24328718).