Spare room: Q1 London hotel transactions fell 8.8%
year on year
the global travel market on its knees, others are considering a move away from
the hotel market. Last week, Colliers International proposed an easing of
planning restrictions to allow hotel owners to repurpose their properties on a
temporary basis under permitted development rights.
question is: will such moves really be temporary or do they signal the start of
a resizing of the hotel market – and what should those that elect to stay in
hotels do to try and stay in the game?
to Savills, transactions in London’s hotel market totalled £1.15bn in the first
quarter of this year, reflecting an 8.8% decline year on year (with the key
single deal being the sale of The Ritz). More recent data shows revenue per
available room – or revpar, a key metric for the industry – was down in April
by nearly 80% compared with the previous year.
compound matters, law firm Boodle Hatfield says that the UK’s top 30 hotel
groups also have debt levels that are 44% higher than during the credit crunch,
making it more difficult for the sector to weather the crisis.
A lot of hotels offer great solutions [to] the housing
Paul Barrasford, Colliers International
hotel groups have applied for loans through the government’s Coronavirus
Business Interruption Loan Scheme to help them through. But Boodle Hatfield
says that many smaller, independent hotels have struggled to access these
loans, despite the government guaranteeing 80% of loans made to companies with
a turnover of £45m or below.
debts piling up and revenues tumbling, repurposing will seem an enticing option
to many hotel owners. Colliers International argues that they could turn their
empty properties into much-needed housing.
a lot of the hotels – particularly smaller and mid-sized stock, for which the
road back might be a bit more of a challenge – offer great solutions to feed
into the housing shortage,” says Paul Barrasford, director of hotels agency at
city-centre hotels with a dependence on international visitors should also
consider a change of direction, he adds: “If you’re a staycation hotel and
you’ve got lots of open space where people can eat and drink, you’re probably
chomping at the bit to open and cope with all this demand, but if you’re an urban
hotel in a city centre reliant on international tourism, your flow of business
into your hotel is going to be difficult.”
even with a relaxation of PDR, conversion is likely to be a costly, lengthy
affair, with planning permission hard to come by.
hoteliers don’t own their properties and, alongside those that do but can’t
reposition their offers, will have no option other than to try to weather the
have to adapt their offers dramatically if they want to survive when they do
reopen. Short-term requirements for conferencing facilities are likely to
plummet and a host of social distancing and health and safety measures will
have to be introduced such as better ventilation systems, more health checks
and a greater focus on cleanliness.
one hand, this will present opportunities to introduce more food and beverage
spaces and accommodation. On the other, it will be a leap into the unknown.
Nobody knows what level of business to expect and the prospect of further
lockdowns will be ever present.
can open at the start of July, but don’t expect all of them to be in a rush to
fling open their doors – not as hotels, anyway.