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Manchester is ripe for hotel growth, says report

13 June 2013 by
Manchester is ripe for hotel growth, says report

Manchester has the potential for significant hotel growth, according to new research from financial advisory company Zolfo Cooper.

Strong occupancies, combined with one of the lowest active pipeline for hotel development in the UK, suggest that the city should become a focus for investors.

The Hotel Bulletin: Q1 2013 produced by Zolfo Cooper in conjunction with AM:PM hotel data company and HVS hotel consultants, highlights how Manchester has transformed into a seven-night-a-week location with "one of the strongest cultural and commercial offerings in the UK".

Expansion has been spurred by rapid growth in the financial services, media and public administration sectors with the BBC's increased presence in the region being of particular significance. It has also flourished through sport and culture with the presence of two of the world's largest football clubs and venues such as the Lowry and the MEN Arena.

In 2012, Manchester achieved a 7% year-on-year increase in revenue per available room (revpar), enhanced by the hosting of Olympic football matches in July and August and the holding of the X Factor finals in December.

Strong trading has continued into 2013 with January achieving the highest occupancy figures since 2008 and February experiencing the highest levels since record began. In March, weekend occupancy increased from 78% in 2012 to 86%.

Overall for the first quarter of 2013, Manchester achieved year-on-year growth in occupancy of 4%, average room rate (1%) and revpar (6%).

Meanwhile, the increase in new accommodation supply has been slow with only three hotels, involving 362 bedrooms, opening in the past 12 months. They include the 19-apartment Blue Rainbow aparthotel, the 15-bedroom Ibis Budget and the 193-bedroom Premier Inn. The last full service hotel to open in Manchester was the Holiday Inn Manchester Media City in 2010.

Alongside budget hotels and aparthotels currently under development, new upmarket offerings include the forthcoming 178-bedroom Hotel Indigo, 223-bedroom Hotel La Tour and 139-bedroom hotel in Old Trafford from former Manchester United footballer Gary Neville.

Manchester's current bedroom supply is dominated by the budget sector, which accounts for 39% of properties, followed by four-star hotels (31%), three-star (21%), aparthotels (6%) and five-star (3%).

"An increase in development activity in Manchester is likely to follow if performance metrics remain strong," concludes the report.

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