Confident hoteliers keep building

The resilience of the travel sector over recent years and the boost to tourism from a weaker pound has prompted a wave of new investment in hotels and leisure facilities which appears to be picking up speed. The major hotel chains are continuing to expand their building programmes, particularly in the regions outside London in the confidence that they can capture market share and keep new bedrooms full. The latest Glenigan mid-year forecast suggests the underlying value of new work project starts in the hotels & leisure sector is set to rise by 16% this year and a further 8% in 2018. The development pipeline in the sector has also been growing and after project starts rose 8% last year, the value of hotel & leisure projects granted planning approval in the first five months of 2017 was up by an impressive 42% on the period a year ago. Glenigan figures also highlight the healthy pipeline for hotel projects in the regions with planning approvals in Yorks & Humber, the North West and the South East all on course to be worth more than in London over this year. Hotel groups have been encouraged by growing numbers of overseas visitors to the UK attracted by the fall in the value of the pound in the wake of Brexit. In the quarter to April, overseas visitor numbers rose by 11% on the period a year ago, with spending some 14% higher. A weaker pound is also encouraging more domestic holidaymakers to take breaks at home. The investment in the sector also reflects a growing confidence in its medium and long term prospects. A recent report for the British Hospitality Association suggested that hospitality has grown faster than any other sector since 2008 and now ranks as the country’s fourth largest employer. Tourism and hospitality was worth £73 billion to the economy last year and although prospects in the sector may be clouded by slower growth and Brexit, it could create a further 500,000 jobs over the next five years. Contractors working on sites for the major hotel chains are certainly likely to be recruiting. Whitbread’s Premier Inns, the country’s largest hotel chain, said last month that it is on track to open around 4,200 hotel rooms this year, on top of the 9,000 rooms it has opened over the past two years. It also reported strong sales growth over 9% and despite the expansion in capacity it is maintaining healthy levels of occupancy, which stood at 79.2% in the first quarter. Premier Inns is taking advantage of the growth of domestic tourism and continuing to win market share from traditional B&Bs. Like the other hotel chains, it is also gaining from a digital booking platform, which helps it in the business market. Meanwhile, Travelodge, which is now partly owned by Goldman Sachs, recently highlighted plans for a £125 million expansion this year which will involve 15 new hotels. As well as sites in London, the group is building new developments in Inverness, Newcastle, Sterling, West Bromwich and York.