Third runway at Heathrow will boost demand for new hotel rooms

03 July 2015 by
Third runway at Heathrow will boost demand for new hotel rooms

A third runway at Heathrow Airport will see demand for hotel rooms increase by 42%, equating to an additional 3,500 beds, according to estate agent Savills.

The company's forecast came about after the Airports Commission's final report backed a third runway at Heathrow, saying it would add £147b in economic growth and create 70,000 new jobs by 2050.

It also highlighted that the average occupancy of 78-79% for airport hotels over the past 10 years made the locations attractive to operators despite average daily rates often being lower than their city centre counterparts.

Even without the extra runway capacity, the rising passenger numbers at Heathrow was already attracting new brands, explained Savills.

It suggested that new pod hotel concepts such as Yotel, and budget boutique operators such as Bloc Hotels would be likely to capitalise on the growing airport market, alongside traditional brands such as Hilton and Holiday Inn.

James Bradley, associate director of hotels at Savills, said: "These products are well suited to the short stay airport hotel guest and we expect to see this type of brand expand around Heathrow."

Marie Hickey, commercial research director at Savills, added: "The historical link between airport passenger numbers and hotel demand implies that Heathrow's third runway will generate the requirement for new supply."

In 2014 there were 80 airlines operating from Heathrow, serving 185 destinations in 84 countries.

UKinbound welcomes report backing third Heathrow runway >>

Hotel demand could soar 71% after Heathrow or Gatwick expansion >>Savills predicts regional hotel transactions to top £2b in 2014 >>

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