Sun shines on hotel and leisure construction sector

The hotel and leisure construction sector has been one of the industry’s bright spots over recent years, partly as a lower pound has created demand and building projects involving more hotel rooms. The early signs are that the upturn in leisure construction market trends is continuing into 2018. As well as continued expansion by the major hotel chains, building contractors in the leisure sector are set to benefit from some major new sports stadiums.

Glenigan Construction market analysis shows that the value of underlying hotel and leisure construction sector starts rose by 16% last year and the momentum appears to be being maintained.

Glenigan research for JLL shows construction starts in the leisure sector rose 16% in the three months to February 2018, compared to the period a year earlier, and as the pipeline strengthens, it should translate into an 11% rise in construction projects starts in the sector this year.

Rooms for growth

Despite some market weakness in the London, the large hotel chains are continuing to invest in construction projects involving new rooms. Premier Inn, part of Whitbread, has added more than 10,000 rooms in the past two years to a total of 71,282 rooms in the UK. But with its latest occupancy standing at 83.3% it is planning to expand capacity to 85,000 by 2020 and has secured sites for the extra 13,700 rooms it plans to build.

Meanwhile, Travelodge last month unveiled plans for further significant expansion in the UK which should provide a rich source of tender opportunities. Having opened 78 hotels over the past five years, the group now plans to open 20 new hotels (with over 1,900 rooms) across the UK in 2018, creating 550 new jobs in a £240 million development to be funded with third party investors. As part of its ‘premium economy concept’, the chain is also investing in a further 400 SuperRooms which will be rolled out to its hotels in London and regional centres such as Bristol, Edinburgh, Manchester and York.

Hotels increasingly play a central role in major mixed-use building projects. A 171 bed hotel, for example, is a key part of Endurance Land’s £35 million office/retail/restaurant scheme at 68 Farringdon Road in central London. The scheme is at the pre-tender stage and construction works are set to start in Spring 2019. A hotel is also a major part of British Land’s £25.3 million Gateway Building at 1a Sheldon Square in Paddington which also includes retail and leisure facilities and where construction works are set to start this Autumn.

Sporting construction

The hotel & leisure sector is also set to benefit from a pick-up in on construction works on sports stadiums. Detailed plans have been submitted for a £100 million extension to the main stand at Crystal Palace FC’s Selhurst Stadium in Croydon where work is set to start next Spring and should run for 36 months. Elsewhere, Fulham has recently been granted permission for an £80 million redevelopment of its Riverside Stand at Craven Cottage, where construction works are expected to start next year.

Meanwhile, new sports stadiums are part of a mix of construction projects worth £750 million for the 2022 Commonwealth Games in Birmingham – including an upgrading of Alexandra Stadium and a new aquatic centre in Sandwell – which is at the pre-tender stage and is set to start in the city this summer.