Pipeline strengthens for hotel & leisure projects

The pipeline of hotel & leisure projects is strengthening as clients plan more work against a background of a growing number of people opting to stay in the UK on their holidays.

Hotel & leisure projects with a combined total of just over £1.4 billion were granted detailed planning permission in the three months to June 2023 according to Glenigan’s construction industry research. This total is up by 20% on the second quarter of last year.

Glenigan’s economics director Allan Wilén comments: “Project starts in the hotel & leisure sector are up 4% on a year ago and other indicators earlier in the pipeline are also positive. There has been an increase both in the value of work approved and contract awards are also up on a year ago.”

Regional approvals

London is usually the hub of hotel construction work in the UK, but there are signs of work rippling out of the capital.

The value of planning approvals doubled in the South East with work totalling £179 million given the green light in Q2 2023.

Hotel schemes in the South East with approval include an £18 million development proposed by Magnolia Park at Boarstall in Aylesbury (pictured) (Project ID: 21193975) and the £17.9 million Bugle Hotel planned by the National Pub Portfolio for Friar Street in Reading (Project ID: 22365726).

In the South West, the value of work approved in the second quarter of 2023 was five times higher than a year ago at £201 million.

Schemes in the South West securing planning approval in Q2 2023 include a £16.3 million conversion of the former Royal Mineral Water Hospital in Bath into a 160-bed hotel (Project ID: 19409754).

The £13.1 million Noss on Dart Marina Hotel at Dartmouth in Devon also has approval (Project ID: 20124873) and Glenigan’s construction market research shows DNA were recently appointed construction managers. Construction work should start on site this October.

Rewarding awards

The total value of hotel & leisure projects where a contract was awarded in the second quarter of 2023 has also improved, rising 4% on a year ago.

Developments with a contractor now on board include Ask’s proposal for a 344 bedroom new hotel at Baltic Quarter on Gateshead Quayside (Project ID: 23059794). Contractor Russell WBHO has been appointed to build the £48 million scheme, which is being supported by a £20 million grant secured earlier this year by Gateshead Council from the Government’s Levelling Up fund. Glenigan’s construction industry research suggests work will start on site in September.

Elsewhere, Buckingham has been recruited as the contractor for a planned £30 million extension to the hotel at Chessington World of Adventures Resort-Water Park (Project ID: 22442312).

Upturn ahead?

BDO’s latest Hotel Britain report suggested that there ‘are encouraging signs that an appetite for discretionary spending may be returning’, but that ‘assets may be tired and in need of capital investment’.

This is good news for contractors looking for work in the hotel & leisure sector and Glenigan’s construction market data shows that clients are already planning to make those capital investments.