Regional hotel property focus – Glasgow

25 July 2014
Regional hotel property focus – Glasgow

Glasgow's hotel sector is enjoying a purple patch, with a number of new hotels under construction adding to the overall bedroom stock (standing at 6,800) for
Scotland's largest city. One of the main drivers for current activity is undoubtedly the Commonwealth Games, which will take place in Glasgow from 23 July to 3 August, creating a significant spike in demand for hotel accommodation this summer. With the Ryder Cup at Gleneagles following in September and the MTV Europe Awards in Glasgow's SSE Hydro Arena in November, this is not a blip.

The general trend in the last few years has been positive, with room occupancy in August 2013 up 6.8 percentage points on the year before, and revpar up 17.45% over the same period.

Already confirmed as conference capital of Scotland, hosting more conferences and welcoming more delegates than Scotland's other six cities combined, Glasgow is second only to London in attracting international conference delegates. Conferences to the city are confirmed to 2021 and represent 20% of hotel rooms sold, meaning that one in five guests in a hotel is a high-yield delegate.

The opening of the 12,500-seat SSE Hydro Arena will further boost the city's major event and conference credentials with a calendar of 140 events every year, bringing the potential to inject £131m per year into the Glasgow economy and enable Glasgow to compete with London's O2 and New York's Madison Square
Garden for world-class performers. Added to that, the Emirates Arena - one of the many purpose-built facilities that showcase the £2b investment in the Games - will ensure that the city, currently ranked 9th in the world league of ultimate sports cities, and first for global sports marketing, can continue to attract top international sports events.

Glasgow is also a popular short break destination, voted the number one UK destination on the rise in 2012 by users of TripAdvisor, and claimed third spot in TripAdvisor's Top Ten UK destinations, 2013. Boasting the UK's second-largest retail centre outside London's West End and world-class cultural attractions, the city pulls in 2.3 million visitors each year.

To help meet demand for accommodation, supply is increasing with the opening of five new hotels in the coming year: a Z hotel (104 rooms and the first in Scotland), a de Vere Village Urban hotel (120 rooms), a Premier Inn (180 rooms, due to open before the Commonwealth Games), a Hampton by Hilton
(88 rooms) and a Travelodge (171 rooms).

Further hotel investment opportunities are available throughout the city centre, and Glasgow's planning department is very proactive, and supports the fast tracking of major planning applications. Investors looking at Glasgow will be pleased to note that the city is an eligible area for the Business Premises Renovation Allowance (BPRA) which enables investors to make use of 100% capital allowances for "qualifying renovation expenditure" on derelict commercial properties.
Anne Murray, business relationship manager, Invest Glasgow

With so many overseas visitors expected to visit Glasgow for the Commonwealth Games in 2014 (as well as visitors to Scotland for Gleneagles' Ryder Cup in September) the city would naturally expect a large increase in occupancy numbers, similar to that which London enjoyed during the Olympics. This will serve as a boost to some already impressive numbers.

In the last 12 months there has been a 3% increase in Glasgow's hotel occupancy rates, rising from 77.1% to 80.1%. Glasgow's average room rate (arr) has grown by 5.66% since May 2013, with Scotland's hotels as a whole outperforming the rest of the UK apart from London. Premier Inn will soon open its sixth hotel in the city centre at Pacific Quay, taking the total of its bedrooms in Glasgow to over 1,000, which will complement the many upmarket brands and independent establishments that populate the local hotel scene.

In May, Glasgow Airport announced year-on-year passenger growth of 4.3%, with increases in both domestic and international visitor numbers, up 1.6% and 6.9% respectively. With Glasgow having some of the best shopping and nightlife the UK has to offer, it is no surprise that the city's hotel and tourism industry is flourishing. Hopefully it will make the most of what will certainly be a remarkable year.
Alan Frost, manager, Mazars LLP

Glasgow: supply, pipeline and transactions

People Make Glasgow is the latest branding for the city as it enters the final countdown to the Commonwealth Games. In the 30 years since the
city's first slogan, Glasgow's Miles Better, was launched, it has undergone a remarkable transformation from an industrial city renowned for its shipbuilding into a major commercial centre with a diverse range of cultural, leisure and retail attractions.

At the heart of this urban chrysalis has been a drive by Glasgow City Council and other public sector bodies to invest in key infrastructure and marketing to sustain this evolution and support economic growth. Initiatives such as the SECC and more recently the SSE Hydro Arena are perfect examples of this approach, which have enabled Glasgow to establish itself as a major player in the international conferences and conventions market. The Clyde Waterfront regeneration project also continues to deliver significant benefits.

The hotel market in Glasgow comprises just over 8,000 rooms, which extends by almost half as much again within a 10-mile radius of the city centre. Supply is
well balanced across the main quality segments with major global, international or national brands accounting for around 70% of rooms.

Hotel developers and investors have long had Glasgow on their radar but, for various reasons, a relatively sizeable potential pipeline of new hotels hasn't materialised yet. The 91-bed Park Inn by Radisson on West George Street and the 180-bed Premier Inn at Pacific Quay have been the main new openings over the last year.

This situation is changing, however, with the 104-bed Z Glasgow and 131-bed Travelodge Glasgow Queen Street contributing to an expected 6% increase
in room supply in 2014.

A further 7% supply increase is on the cards for 2015 with new openings scheduled for Hampton by Hilton, Motel One and Village Urban Resorts.

Looking further ahead, several more speculative development sites are slowly progressing that could come to fruition. These include two potential properties where conversion into Accor branded hotels are proposed.
Alan Gordon, director, AM:PM

A strong year ahead
While Glasgow's occupancy has been steady, rates have lagged behind Edinburgh considerably due to the strong private leisure demand and financial services base. A sharp increase in Glasgow's supply of economy hotels has mainly been driven by the Business Premises Renovation Allowance (BPRA) - a tax-saving incentive to bring derelict or unused business properties back into commercial use. This has resulted in an additional 790 rooms in the last few years, with more proposed.

This increase could be compounded by the proposed 374-room Motel One, which would become Scotland's largest hotel by room numbers. This could take the wind out of the sails of many proposed economy hotel developments. Confidence in mid-market and upscale hotels is greater - one example being Starwood Capital's creation of 46 additional guest rooms within the Grand Central hotel, taking the room count to 230.

New stock has been brought to the market ahead of the Commonwealth Games, with Premier Inn opening a 180-room hotel and De Vere Village developing a 120-room hotel at Pacific Quay. Corporate demand is further supported by the Conference Bid Fund, which offers a subsidy per delegate to attract conference business to Glasgow from competing cities around the world. Visit Scotland reports a boost of £27m to the city economy.

2014 will undoubtedly be a strong year in the Glasgow hotel market. Room yields are already up over 19% year-on-year until May 2014, and with the continued investment in new and existing stock to support the demand of corporate and leisure travellers, hoteliers will enjoy the legacy for years to come.
Keith McBain, director, JLL, Hotels & Hospitality Group

The Caterer Breakfast Briefing Email

Start the working day with The Caterer’s free breakfast briefing email

Sign Up and manage your preferences below

Check mark icon
Thank you

You have successfully signed up for the Caterer Breakfast Briefing Email and will hear from us soon!

Jacobs Media is honoured to be the recipient of the 2020 Queen's Award for Enterprise.

The highest official awards for UK businesses since being established by royal warrant in 1965. Read more.

close

Ad Blocker detected

We have noticed you are using an adblocker and – although we support freedom of choice – we would like to ask you to enable ads on our site. They are an important revenue source which supports free access of our website's content, especially during the COVID-19 crisis.

trade tracker pixel tracking