ME London, the new UK flagship for Melia Hotels International, achieved a 110 per cent increase in RevPAR in the first quarter of the year to help boost the Spanish company’s overall net profits by 200 per cent. ME, along with the Melia White House London, emphasised the strong outlook for the capital’s hotels this year.
An extra 24,000 UK hotel rooms are in the pipeline by the end of 2015, according to the Institute of Hospitality, with 9,300 in London and 14,700 in the regions.
Edinburgh
REGIONAL ROUND-UP
OUTSIDE LONDON, the news for hotels has been generally positive, helped by the overall economic upturn. But data from Hot Stats, which has monitored UK hotels’ performance for the past 16 years, shows that the real story for regional hoteliers has been seeking to keep on top of rising operating costs, especially energy and staff wages. As a result, there are some wide variations in performance. Yorkshire and Humberside hoteliers, for example, appear to have kept on top of rising costs rather better than those in Manchester. In the south-west, hotels have maintained their “solid” start to the year, while Cardiff’s have faced “challenging” times. Belfast hoteliers, in contrast, have had a good start to the year, although the position in Scotland has been more mixed. Aberdeen, for example, achieved strong revenue growth in the first quarter of the year, but saw occupancy levels decline 4 per cent. Glasgow, however, has benefited from buoyant conference business so far this year (helped by new capacity coming on stream) while the intensifying focus on the independence referendum is giving a boost to Edinburgh’s hoteliers.
50 BBT JULY/AUGUST 2014
“A branded hotel is generally better for a corporate due to the leverage that can be achieved from volumes in different hotels under the same brand”
brands, such as Citizen M and Z Hotels. Dutch-owned Citizen M is targeting three further UK hotels to add to existing properties at London Bankside and in Glasgow; while Z Hotels was due to open two new hotels last month (June) – in London’s Piccadilly and Glasgow, to add to its three existing hotels in London and Liverpool. Tune Hotels, another budget newcomer, is set to open a 104-room property in Newcastle in October, to add to its existing four hotels in London and one in Edinburgh.
THE COST OF RE-BRANDING Yet there are some concerns that actual room rates for this wave of newcomers may turn out to be higher than expected, especially in London because of the current strong market in the capital. Re-branding costs money and owners obviously want the best returns, but there is a clear danger of being too greedy by chasing higher rates/returns rather than occupancy levels – the main post-recession strategy. The power of brands, however, can sometimes trump rate issues with buyers. “A branded hotel is generally better for a corporate due to the leverage that can be achieved from volumes in different hotels under the same brand,” says Jef Robinson, global category manager for software company Citrix. However, he adds: “Ultimately, we find that what dictates the selection of preferred hotels is simply location and quality of the actual property.”
BUYINGBUSINESSTRAVEL.COM
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