New hotel construction will continue into next decade

British Hospitality: Trends and Developments, 2010 is sponsored by American Express and points out that, although the industry did not see a significant decrease in the number of new rooms opening during the year, compared with 2009, up to 70 projects were abandoned or put back to an indefinite date in the future.

“Undoubtedly, the recession has curtailed bank funding and sent some developers into insolvency,” it says.

“Although there are exceptions (for example, the Cornwall in St Austell, the Oxfordshire in Thame and the Casa in Chesterfield) the majority of the new hotels are branded properties with many of the developments undertaken by franchisees.”

The report says that the budget sector continues its expansion with over 5,300 new rooms added in 2010 and with new brands, such as Citizen M, H10 and Tunes, opening their first properties in the UK. In 2001, there were 50,000 budget rooms, a figure which has risen to 112,600 in 2010.

Even though budget hotels are responding to consumer demand by introducing less expensive, but high value, rooms that are attractive to both the business and leisure market, they felt the impact of the recession in 2009 with lower occupancies, and average room rate and revenue per available room.

On insolvencies, the publication believes that the number in the hospitality industry – 2,429 in 2009, a rise of eight per cent – has reached a peak.

“Although the figures for 2008 and 2009 showed a significant increase on 2007, in the context of the industry’s 200,000 establishments, it’s clear that it has survived in better shape than many thought possible.  Of all the sectors, hotels suffered the least.”

Figures for the catering sector suggest that while the number of hotels fell slightly in 2009, the number of restaurants and Quick Service restaurants increased, although the total number of meals served declined from 5bn to 4.8bn while food and drink sales increased by just under £1bn.

“Meal offers are still being provided at the levels of twelve months before, but the style of offer has been changing,” says consultant, Peter Backman, looking to the future.

“There are still plenty of straight Two-for-Ones and Money-off offers, especially in the pizza restaurant sector, where the UK’s largest restaurant brand, Pizza Express, has led the pack. But many offers are now being more targeted, for instance at particular times of the day or week when business is traditionally slack. Other deals are structured to focus on higher margin items which can readily withstand a price reduction.”

Ufi Ibrahim, BHA’s chief executive, says that the industry has successfully survived the recession without incurring the widespread damage that was predicted at the outset.

“The publication underpins the importance of our industry to the UK economy and provides a valuable source of intelligence and data on which sound policy decisions – both commercial and public – can be made.”  

And sounding a note of optimism, Kathryn Pretzel-Shiels, head of the UK’s hotel, restaurant and travel industries for American Express Merchant Services, says that hospitality spending is heading towards pre-recession levels and the industry can be cautiously confident that there will be further growth, albeit at a slow rate.

“This year, we have seen hotel spending by our card members in the UK steadily increase, far exceeding growth rates in other major European cities.  An in-depth study by American Express Business Insights found that this was largely driven by luxury hotels, with spending in mid-scale hotels growing at a slower rate.”

Have your say on this story using the comment section below