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With worldwide markets volatile and the UK still coming to terms with the effects of the credit crunch the general consensus for the economy is caution. However, the construction industry is weathering the storm well with most commentators agreeing that the industry will still continue to grow albeit by a reduced rate compared to 2007.
The growth will largely come from major commercial projects that are already underway and increasing government support for new education and infrastructure programmes. Apart from this there are some sectors that are still strong, such as budget hotels.
This can be attributed to a number of factors according to Wakemans director Shaun Baugh.
“Many of the major operators have ambitious plans for growth and there are many social and economic factors that are supporting the rise in demand for this type of hotel accommodation,” he says.
“For example, families are more likely to holiday in the UK this year, as they get to grips with the credit squeeze’s impact on their disposable income and the current economic climate is also giving business travellers cause to seek out low cost hotel accommodation. This, along with a growing awareness of the environmental impact of air travel, is fuelling the demand for budget hotels.”
This view is supported by some recent statistics. According to MINTEL research, the UK’s budget hotel market increased in value by 38% between 2002 and 2006, and a further 38% growth is forecast over the next five years. MINTEL expects the market to reach £1.5bn by 2012, as demand is boosted by the London Olympics and Paralympics.
Wakemans acknowledges that British business travellers and families have grown to like the ‘no frills’ approach first introduced by the budget airlines and see no need to pay more when all they want from a hotel room is somewhere to sleep. What’s more, they are not only keen to take more long weekend trips and short breaks, but are confident about making bookings themselves and are happy to do so online.
Deloitte’s latest Hotel Benchmark Survey reflects a strong performance from quality, low-cost hotels to the end of September 2007, as revenue per available room increased by 6.8%, and Melvin Gold Consulting says the sector will more than treble in size to account for 26.8% of the total market by 2027. The sector is also forecast to experience its biggest period of growth in the next five years with rises of 10% a year, estimated to be up to ten times the overall market’s growth rate.
Wakemans has a great deal of experience in this sector as it works closely with Travelodge, the UK’s fastest growing hotel company, acting as agent and quantity surveyor for developer schemes and as employer’s agent, quantity surveyor and sometimes planning supervisor on self build projects.
Travelodge has adopted an aggressive growth strategy, targeting a 10% share of the total UK hotel market by 2020. It will invest £3.5bn to treble the size of its estate to 1,000 hotels and, having opened 30 hotels in city centre, edge of town, airport and coastal locations in 2007, is on course to open a further 40 this year.
Currently, Wakemans is appointed to advise on over 20 Travelodges, with a development value of approximately £78m, and London is a prime target location. Travelodge is investing £140m to establish itself as the capital’s largest hotelier – with a provision for 7,000 rooms, representing a 40% market share – in time for the 2012 London Olympics.
After finishing work on the new Bar Café at the Kew Bridge Travelodge, Wakemans is currently instructed on the £15m hotel at Heathrow Airport and is on site with a £7.4m scheme to add two storeys to offices at Tower Hill and convert them into a 190-room Travelodge.
“Travelodge assesses hotel requirements in any given location together with the competition in the surrounding area and establishes a need relevant to the population and access to surrounding roads and attractions,” adds Mr Baugh.
“Coastal resorts are a prime target – Travelodge plans to boost its presence in Blackpool, Great Yarmouth, Torquay and Llandudno – while regeneration is another important factor and the towns and cities, with a good mix of facilities to attract both leisure and business users, are really helping to drive demand for budget hotel accommodation.
“As visitors attend conferences and concerts and clubbers and shoppers book overnight stays, so places like Birmingham, Edinburgh and Newcastle-upon-Tyne are gaining in popularity as short break destinations. Demand also comes from locals who decide to stay over after a night out, and they are also choosing to avoid the hassle associated with stopovers by putting up family and friends at budget hotels instead of their own homes.”
The latest Travelodge to start on site in Birmingham is a £5 million 110 bed hotel located on the corner of Newhall Street and Charlotte Street. The hotel will be an integral part of Newhall Square, the new ‘urban village’ being developed by RO StBernards Limited, which will link the city centre with the Jewellery Quarter.
The five-storey hotel has been designed by Associated Architects, who have been appointed by RO StBernards for the entire Newhall Square development. The hotel will feature Bar Café, Travelodge’s own brand contemporary design bar, which serves breakfast plus snacks and light meals, and is scheduled to open in autumn 2008.
Newhall Square is a £65m mixed use scheme incorporating up to 30,000 sq ft of offices and workshops and 25,000 sq ft-30,000 sq ft of restaurants and bars, plus 235 studios and apartments and underground car parking.
“Our increasing workload with Travelodge is a good indication of where the market is moving and as leisure and business users become more and more determined to secure value for money and the country gears up for the 2012 Olympics, we see good times ahead for budget accommodation providers.”
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