Positive outlook for hotel construction before Christmas

The holiday season may be drawing to a close but the outlook for construction contracts on hotel projects across the country is looking sunnier.

Glenigan data shows that the work pipeline has been growing in the sector with detailed planning approvals for hotel & leisure projects increasing by 12% in the three months to July to almost £2.4 billion, leaving them up 26% on the period a year ago.

Underlying hotel & leisure planning approvals were notably strong, rising by 7% to £1.44 billion, up 42% on a year earlier and suggesting the revival in the sector is spread across jobs of varying sizes.

Much of the new work has involved hotels and guest houses where starts were worth £410 million in the three months to July, up 44% on the period a year earlier and accounting for 38% of all starts across the hotel & leisure sector.

The latest Glenigan Index suggests the momentum behind new construction activity has continued through the summer. It shows that the value of underlying project starts (under £100 million) in the hotel & leisure sector rose by 17% in the three months to August, compared to a year ago.

Positive trends

The underlying trends behind the upturn in new hotel construction activity remain positive. VisitBritain has forecast that the number of overseas visits to the UK this year will rise by 2% to 38.7 million and visitors’ spending will grow by 5% to £32.5 billion.

Meanwhile, the ‘staycations’ that became popular during Covid remain popular on the home front. In May, VisitBritain said its research showed that 35% of British people were more likely to choose a UK trip rather than an overseas one over the next 12 months than in the previous year.

Glenigan data highlights a series of hotel-related construction projects, particularly in the major cities, where work is set to get underway in the coming months.

In Birmingham for example, detailed plans have been granted and applications to tender made for a £16 million conversion at Murdoch and Pitman Chambers (pictured) involving the construction of a new boutique 156-bedroom hotel. Work on the scheme, which involves 8,057 sq m of space, is set to start later this autumn and run for 20 months (Project ID: 17385850).

Moving north to Edinburgh, detailed plans have been granted and work is set to start at the turn of the year on a £50 million hotel/aparthotel at Queensferry Street Lane for client CSG Queensferry (Project ID: 23166048).

Refurbishment projects

Some major hotel refurbishment projects are in the near-term construction pipeline, particularly in London. At the Corus Hyde Park Hotel in Lancaster Gate, listed building consent has been granted and applications to tender are being made on a £152.5 million refurbishment and reconfiguration of all ten floors of the building. Work is due to start later this year and run for 12 months (Project ID: 23171977).

The budget hotel chains are also continuing to refurbish and modernise their facilities. Travelodge chief executive Jo Boydell said in June that the group’s revenue growth was being supported by resilient customer demand from both leisure and business guests.

She also pointed to encouraging trends including continuing staycation demand and more people working in offices and face-to-face meetings. The group is investing in an ‘accelerated refit programme’ which means half of its room estate will have been upgraded by the end of 2024.

Glenigan data shows that work on a £5 million refurbishment of a Travelodge building at Broadway, Newham in east London is due to get underway towards the end of this year (Project ID: 23331903).

Smaller chains of hotels that cater to the staycation market are also investing in expanding and updating their estates. Fuller Smith & Turner, which has sold its brewing arm, recently pointed to a wide-ranging investment programme in its chain of pubs and hotels. Seven schemes have started on site or been completed since its new financial year started in April.

Glenigan data shows dozens of projects, many under £250k, at Fuller Smith & Turner properties across the south of England where detailed plans have been granted or submitted and where work is due to get underway in coming months.