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Three-star hotels squeezed by luxury and budget sectors

15 May 2014 by
Three-star hotels squeezed by luxury and budget sectors

The traditional three-star market is increasingly been squeezed by new hotel developments in the luxury and budget sectors, according to new research published today.

In the Hotel Bulletin: Q1 2014 report from AM:PM, HVS and Zolfo Cooper, the growth of the budget market, which is highlighted as the largest hotel sector, accounting for 36% of all current properties, shows no signs of slowing down. Around one half of all new hotel development will be in the budget sector.

At the other end of the market, five-star hotels account for 12% of all new properties currently under development, while they make up only 4% of the current hotel supply. Four star hotels account for 27% of both the current hotel supply and the active pipeline of hotels set to open in the next three years.

Meanwhile, the three-star market is set to decline. "Despite having 30% of current supply, only 3% of the active pipeline is in the three-star market," said the report. "Budget offerings such as Hampton by Hilton and newer brands like CitizenM are continuing to draw investor attention away from this sector."

Future notable new openings, according to the report, include Marriott's new tech-savvy, budget brand Moxy, which is due to open more than 900 bedrooms in the next three years and hub by Premier Inn, with the launch of 1,700 bedrooms during the same period.

And looking to appeal to a more upmarket guest will be two hotels in the north-west with an element of theming: the 133-bedroom Hotel Football in Manchester from GG Hospitality, which is headed by Ryan Giggs and Gary Neville, and the 153-bedroom Titanic hotel in Liverpool.

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TagsTourism and Hotels
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