0835 Leisure Summer 08_aw.indd - HLL Humberts Leisure

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Featured Focus | Budget property hotels | Nonsuch BayHotel No of Rooms Operator/Developer Status OpeningPark Plaza Apartments, County Hall 395 Park Plaza/Galliard Open 2007Radisson Edwardian, Canary Wharf 169 Radisson Edwardian Open 2007Travelodge, Islington 392 Travelodge Open 2007Travelodge, Heathrow 297 Travelodge Open 2007Grange Hotels, City of London 292 Grange Hotels Under Construction 2008Marriott, Twickenham Stadium 146 Marriott/RFU Under Construction 2008Silken Hotel, The Strand 166 Silken Hotels Under Construction 2008Sofitel, Heathrow T5 600 Arora/BAA Under Construction 2008City Inn, City of London 609 City Inn Advanced Planning 2009Ibis Trocadero 600 Accor/Golfrate Advanced Planning 2009Renaissance, St Pancras 254 Marriott/Manhattan Loft Under Construction 2009Hilton, Wembley Stadium 420 Hilton/Quaintain Estates Advanced Planning 2010Park Plaza, Waterloo 953 Park Plaza/Marlbray Under Construction 2010Shangri-La Hotels, London Bridge Tower 195 Shangri La Hotels/Sellar Property Advanced planning 2010Jumeirah, Beetham Tower 260 Jumeirah/Beetham Early Planning 2011Total Number of Bedrooms 5,748Source: Visit LondonAccording to the survey some 5,748 bedrooms are anticipated toenter the London market over the next three years. But there aremore hotels in the development pipeline which were not includedin the survey or have become publicly known since publication.With all the current and planned regeneration and developmentprojects in London, combined with a slowdown in the residentialmarket resulting in a number of schemes going back to planningfor change of use to hotel, there is potential for double thatnumber of hotel bedrooms. One key aspect of growth in the hotelsector has been the increased reliance and recognition of brands.As more hotel companies dispose of the real estate element oftheir investment, many investors view a brand as further securitywhether the hotel is operated by the brand owner or franchisee.Consequently, very few hotels are constructed without a brandin mind and this is where the likes of Travelodge and Hilton arehighly successful.Growth. Growth. Growth.A report by consultant Melvin Gold forecast that the limitedservice and budget hotel sector would treble by 2027, growing upto 10 times faster than the rest of the hotel industry. This soundslike a fairly optimistic growth level but if one considers that twothirdsof all hotel bedrooms in the UK are currently non-branded,then there is the huge potential for branded operators to take aneven greater share of the UK hotel market.The limited service and budget hotel sector has experienceda great deal of growth over the last few years due to thecombination of aggressive acquisitions and the emergence of anumber of new brands. Travelodge have been among the marketleaders in the budget hotel sector for the last 3-5 years andrecently announced their aim of trebling the size of the Travelodgeestate by 2020 with a view of having a 10% share of the total UKhotel market.An aggressive £200m Travelodge expansion is well under waywith the company recently announcing it had secured 9 newsites and will invest £28.3m in developing new hotels in Cheshire,Poole, Newport, Felixstowe, Devizes, St Helens, Fort William,Clacton and Ashbourne. This has been followed by anotherannouncement that Travelodge has bought a further 6 properties(Bath, Coventry, Edinburgh, Newcastle, Oldham and Stevenage)from Menzies hotels in a deal worth £85m which will straightaway add 700 rooms to the Travelodge estate as part of its planto expand by 4,000 rooms by the end of the year. As part of thisdeal Travelodge has acquired the four-star Menzies Belford hotel inEdinburgh which will be transformed into budget accommodation,after operating as a luxury hotel for 30 years.Whitbread has announced expansion plans for their PremierInn brand, currently undergoing a rebranding exercise fromPremier Travel Inn. Following the acquisition of Golden Tulip UKby Whitbread for a reported £44 million in September 2007, sixGolden Tulip hotels were re-branded as Premier Inn properties,with a further nine sites due to open within the next two years.This includes the planned Tulip Inn developments near York,Doncaster and London Gatwick Airport. The Premier Inn brand isundergoing an aggressive £100m expansion which will increasethe portfolio by 50%. In London there are plans to add a minimumof six new hotels over the next three years to its existing Londonportfolio of 44 hotels. This expansion will increase the totalnumber of bedrooms in the capital from 5,300 to circa 6,500,with a further pipeline of 2,000 rooms expected to be announcedover the next twelve months, representing an increase of 60% toPremier Inn’s London estate. Whitbread also recently completedthe acquisition of the Quality Hotel in Westminster, Kensington’sComfort Inn, and the Purple Hotel in the City of London from theReal Hotel Company for £18.5m. This deal represented a purchaseprice per bedroom of £50,000 on a leasehold basis but following are-branding to the Premier Inn brand the total investment couldbe circa £100,000 per bedroom.Hilton Hotels Corporation announced the introduction of threebrands into the UK in 2007 - Doubletree by Hilton, Hilton GardenInn and Hampton Inn by Hilton. The upmarket full-serviceDoubletree brand will target existing buildings, whilst the midmarketGarden Inn tier will focus upon new builds in city centresand suburban locations. Hampton Inn, the budget hotel offering,will extend the US franchise model into the UK and will be indirect competition with the likes of Travelodge and Premier Inn.Although Hilton have not announced an official target for theHampton Inn brand, they did sign an agreement with Somerston24 Summer 2008
Featured property Focus | | Budget Nonsuch hotels BayHotels in June 2007 to introduce 25 new hotels over the next five years under itsHampton by Hilton brand - this will go some way to creating a healthy presence withinthis sector. Expect further announcements shortly...Other budget and limited service operators currently undergoing aggressive acquisitionactivities are the likes of The Real Hotel Company Plc for their purplehotels brand, LouvreHotels for Campanile and InterContinental Hotels Group for their Express by HolidayInn brand. All of the operators are actively acquiring sites within the UK predominantlytargeting city centre and high quality main arterial route locations.If one listens to the hotel operators, the next two to three years would appear to lookgood for the majority of the branded limited service and budget operators with aggressiveexpansion plans already in full swing. Topland, the Sol Zakay-run company, has embarkedon creating a £1bn portfolio of budget hotels in the UK using £200m of its own equity tobuy development sites, which it will let to operators such as Travelodge and Premier Inn.Topland announced this project in order to capitalise on a fast-growing sector. The budgethotel market is one of the few markets that has not ground to a shuddering halt in thewake of the credit crunch.Other hotel operators have outlined their intentions to enter the exciting budget hotelsector. Rezidor have recently announced that they will be entering the budget hotel sectorby launching a new “colourful” budget hotel brand. In addition to the likes of EasyHotel,Hilton and other operators such as Purple Hotels, the two heavyweights of the budgetsector Travelodge and Premier Inn may find that their expansion plans could face somestiff competition for sites.Capital growthMost existing and emerging operators are focusing significant energies on London. Thefollowing table highlights the main areas within London that Visit London anticipate willexperience the most budget hotel growth over the next 5 years.But where is all the land?With so many operators fighting overthe same sites the result will be acontinuation of increasing land andsite values. Subsequently, operators arecurrently assessing new ways of makingdevelopment schemes more financiallyviable for the developer and these involveinnovative build techniques, such asthe 120 bedroom Travelodge hotel atUxbridge which is being made from cargocontainers, or being a component of alarger mixed-use building.Given that every budget and limitedservice operator is announcing grandexpansion plans, the budget hotel sectorwould appear to be in a solid and stablecondition. Shame that cannot be saidabout the rest of the UK economy.A final thought is that if the five leadingbranded budget hotel operators were tohit their respective national expansiontargets, then we would need to find theequivalent floor space for new rooms ofcirca 20,128,640 sq ft or 462 acres of land.The question is where is all of the landgoing to come from?London AreaCentral LondonEast LondonWest LondonNorth LondonSouth LondonSource: Visit LondonLocal LocationsEuston, King’s Cross, London Bridge, Elephant & Castle, Paddington,Waterloo, Victoria, Vauxhall/Nine Elms/Battersea, Holborn, Hollowayand the South Bank.Bishopsgate/South Shoreditch, Whitechapel/Aldgate, Isle of Dogs,Stratford, Lower Lea Valley, Royal Docks, Barking Reach, LondonRiverside, Deptford Creek, Greenwich Peninsula, Belvedere/Erith,Thamesmead, Ilford, Woolwich, Kidbrooke.Wembley, White City, Park Royal, Heathrow/Feltham/Bedfont/Hounslow, Hayes/W Drayton/Southall/Stockley, Willesden Junction.Upper Lea Valley, Tottenham Hale, Cricklewood/Brent Cross, Mill HillEast, Colindale, Haringey, Heartlands/Wood Green.Croydon, South Wimbledon/Colliers Wood.HLL Humberts Leisure is retained by anumber of leading hotel operators anddevelopers and if you have any sites thatmay be suitable then please contact TimSmith for a confidential discussion.ContactTim Smith BSc(Hons) MRICS, Londone: tim.smith@humberts-leisure.comt: +44 (0)20 7629 6700Alex Campbell BA(Hons) MA, Londone: alex.campbell@humberts-leisure.comt: +44 (0)20 7629 6700Luke Cutler BSc(Hons) MRICS, Londone: luke.cutler@humberts-leisure.comt: +44 (0)20 7629 6700www.humberts-leisure.comHLL Humberts Leisure 25
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