Hotel & leisure construction set for 14% rise after slump

The hotel & leisure sector will be offering opportunities for the construction industry to book into work on over the next 18 months.

After a significant slump of 23% last year, the underlying value of hotel & leisure projects starts (work valued at £100 million or below) is forecast by Glenigan to leap by 14% this year.

“A gradual rise in household income is expected to fuel growth in discretionary spending on hospitality and leisure experiences over the next three years,” says Glenigan economics director Allan Wilén. “This, coupled with a further recovery in overseas tourism, should invigorate the sector, attract investors, and translate into increased project starts.”

Growth will moderate in 2025 but continue, albeit at a slightly lower rate of 6% next year and 7% in 2026.

London focus

A 12% rise in the underlying value of projects securing detailed planning permission in 2023 will fuel this rise. Glenigan’s construction industry research has identified 2,334 hotel-related projects due to start on-site over the coming 12 months.

Work is expected to increase across the spectrum from budget hotels to high-end schemes.

London is set to benefit from the bulk of the hotel construction boom. Across all types of developments. Glenigan expects £1.6 billion-worth of hotel projects to be granted planning permission in the capital this year.

Research from Lodging Econometrics found 77 projects to provide 13,699 rooms in the pipeline in London at the end of last year. Glenigan’s market research suggests an even larger pipeline with 371 hotel projects expected to start on-site in the capital this year.

Many hotel developments in London are major developments, such as the £400 million Haymarket House scheme in Westminster (Project ID: 18258527). Detailed plans have been submitted. If successful, construction could begin next April.

Developer Ocubis has planning permission for a £250 million plan designed by Hopkins Architects to build 900 hotel rooms across two interlinked towers in Lambeth (pictured) (Project ID: 15220488). A start has been mooted for later this summer.

Underlying level

Nearly half of the projects in the pipeline in London are at an underlying level and valued from £1 million to £100 million, such as Highbride Properties £26.3 million plan to turn the Old Spotted Dog in Newham, east London, into a 68-bed hotel (Project ID: 20078015). Plans are being revised but work could begin this autumn.

Tenders have been returned for the £70 million One Long Lane scheme, which features a boutique hotel in the City of London (Project ID: 18391239). Plans have been approved but Glenigan does not expect work to begin until early next year.

Provincial plans

Outside of the capital, plans for smaller value hotel schemes are also increasing.

Travelodge plans to build 100 hotels in London and contractor Barnes has just begun on a £51.3 million conversion of Gredley House in Stratford, east London, into a 151-bed Travelodge (Project ID: 23031375).

Travelodge also plans to build 40 hotels in South West England and recently appointed consultants Hartnell Taylor Cook to support this programme.

The region with the largest number of hotel starts scheduled for the next year is the North West, where Premier Inn is also rolling out budget hotels including a £26 million scheme on Rochdale Road in Manchester, where work should begin in November (Project ID: 23244858).

With swathes of hotel projects across the country of all sizes, this sector should provide a steady flow of work