New UK hotel room supply predicted to reach peak levels

22 September 2016 by Katherine Price

The number of new hotel rooms to open in the UK in 2016 is on track to reach its highest level since 2012, according to hotel data and market intelligence company AM:PM.

It says new supply in the UK hotel sector has been building steadily since 2013, following a near 40-year peak in 2012, and passing the 10,000 new bedroom mark in 2016 suggested that the sector was on track to exceed the total of 13,500 new bedrooms opened last year. New supply for the year to date currently amounts to just over 10,250 bedrooms, around a third of which have been in London, which is set to add over 4% to supply this year.

There is a strong pipeline of openings scheduled for Q4, especially in London where several large hotels are due to open including the 313-bed Novotel London Canary Wharf, 494-bed Park Plaza London Waterloo and 168-key Locke aparthotel in Aldgate. Outside the capital, hotels are expected to open in Bristol and Cheltenham by the end of the year, and in Scotland hotels with more than 100 bedrooms are due in Aberdeen, Dundee and Edinburgh. Supply is set to rise in the rest of the UK by 2% in 2016.

Budget hotels, led by Premier Inn and Travelodge, have continued to account for well over 50% of new supply in 2016, with 24% of new bedrooms being added by the 4-star segment. Aparthotels and serviced apartment have now become the next strongest growth area, accounting for around 10% of total new supply this year, led by operators including Staycity, SACO and Skyline.

New hotel developments remain the core driver of supply growth, with new build projects accounting for 49% of the total and conversion of buildings into hotel use representing a further 28%. However, property extensions to add extra bedrooms to an established hotel have become increasingly popular and currently account for 23% of new bedroom supply in the UK.

Alan Gordon, director of AM:PM, said: "We've continued to witness the strongest appetite from hotel brands, developers and operators in the major cities with Birmingham, Manchester, Edinburgh and Glasgow adding over 1,800 bedrooms so far this year.

"As always, it's important to consider net supply change after factoring hotel closures. In the first nine months of 2016, hotel closures have resulted in almost 2,800 bedrooms being taken out of supply. We expect the full year loss from closures will be lower than the 4,200 bedrooms in 2015."

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