Budget hotel construction opportunities on the rise

Budget hotel construction is experiencing a significant upswing.

Encouraged by the trends in forward bookings, the major chains – notably Travelodge, Premier Inn, and Ibis – are starting some major refurbishment programmes and working on plans to build new hotels which will create significant new work prospects.

The brighter outlook comes as the April edition of the Glenigan Construction Review shows that underlying detailed planning approvals across the wider hotel & leisure sector were worth £1,984 million in the first quarter of this year, up 4% on the previous three months and 5% higher than a year earlier. Hotels and guest houses accounted for some 29% of starts in the sector during the three months to March and were worth £191 million.

Accelerating refit programme

Having upgraded a quarter of its estate of almost 600 hotels by the end of last year, Travelodge said last month that it is accelerating its refit programme. The chain now plans to upgrade 50% of its room estate by the end of 2024. New reception areas, ‘next generation’ rooms and upgraded bar cafes are included in new designs.

Whilst Travelodge plans to open six new UK hotels in 2024, it expects to open between 15-20 new hotels annually as market conditions improve. The chain also has ambitions for long-term growth, and it has identified over 300 target locations in the UK for new hotels.

Glenigan data highlights numerous refurbishment and new build projects underway at the chain’s hotels. For example, work is set to start next month on the £51.3 million Travelodge London Stratford, a mixed-use refurb development which will provide 151 hotel rooms and where Barnes Construction is the main contractor (Project ID: 23031375).

Elsewhere, details plans have been submitted for a £3.2 million extension at Travelodge Covent Garden (pictured) which will create 55 new bedrooms and where work is set to start this autumn (Project ID: 23157196).

Strong demand

Premier Inn, part of Whitbread, is also investing in its estate on a significant scale and generating new construction work. Last autumn, the brand said that UK hotel demand was strong in London – from both leisure and business customers – and in the regions.

The chain is seeking to take advantage of what it sees as the ‘structural decline’ of the independent hotel sector. It is looking to grow its open and committed pipeline from 91,000 rooms today towards a long-term potential of 125,000 rooms across the UK and Ireland. Currently, Premier Inn UK has around 84,000 rooms open across 849 hotels.

As part of the chain’s refurbishment programme, it has started to replace its older rooms with a new format. Over coming years, the chain is also planning to launch more of its new, smaller hub hotels –it has 16 currently – and add to the 4,400 Premier Plus rooms which feature across its UK estate.

Glenigan data details various significant projects in the pipeline at Premier Inn which are at the pre-tender stage. On the south coast for example, detailed plans have been granted and work is set to start this coming September on the £13 million Premier Inn Bognor Regis, a five-storey, 116-bed hotel on the site of a former fire station (Project ID: 23137670).

Meanwhile, new investment is also underway across the 119 UK hotels operating under the Ibis brand, which is part of the Accor hospitality group. Construction is underway on a new Ibis Styles hotel in Burton upon Trent involving 81 rooms and suites which is due to open in the second half of this year under a franchise agreement (Project ID: 04640511).

Meanwhile, tenders have recently been returned on a £4 million extension to an existing hotel at Ibis York Centre where work is due to start this summer and run for 12 months (Project ID: 23307080).