Market Reports

U.K. - Leeds unites hoteliers

If you are in the business of hotel construction, chances are you have been spending a lot of time in Leeds recently.

Deloitte Over the last couple of years the city has experienced a phenomenal level of hotel development as operators rush to ensure their brands have a presence in one of UK’s most prominent cities. Room supply is estimated to have increased by 30 percent since 2001. Perhaps unsurprisingly, the immediate impact of increased supply has been subdued hotel occupancy levels – however these have not been as great as could have been expected.

Data from the HotelBenchmark Survey by Deloitte shows that year-to-October 2003 occupancies in Leeds are down just 0.5 percent, with the additional supply having a greater impact on average room rates, which have slipped by 1.4 percent compared to the prior year - the net impact on revenue per available room (revPAR) being a decline of 1.9 percent. Whilst this is roughly in line with the regional UK average, the performance of some of Leeds’ Yorkshire counterparts, such as Sheffield and York, has moved in the opposite direction. Both Sheffield and York have seen revPAR grow in 2003 – particularly in the case of York, which operates at higher occupancy levels and is only marginally behind Leeds in terms of average room rate.

So why all the fuss? Simple – Leeds is becoming big business as big business moves into Leeds. The city has transitioned itself over the years to become one of the UK’s most significant financial centres and is now recognised as the top legal centre in the UK outside London – this is all in addition to having the third largest manufacturing sector in the UK.

In 2002, Leeds ranked as the 20th most visited city in the UK, no doubt helped in part by the development of its travel infrastructure. Leeds-Bradford Airport (and in particular the ‘low-cost’ airline sector) conveniently serves as a connection to a number of UK regional airports such as Edinburgh, Glasgow and Belfast as well as London’s Heathrow airport and tourist hotspots such as Alicante, Malaga and Palma. Furthermore, direct flights into key European cities such as Amsterdam, Geneva and Paris have helped open up both leisure and business travel. Latest passenger figures for Leeds-Bradford Airport for the year-to-November 2003 show an increase of 32 percent compared to the same period in 2002.

Not content with standing still and basking in the glory of its success, Leeds is undergoing further development as a number of regeneration projects come to the fore, such as the Aire Valley Employment Area (expected to provide around 40 percent of the city’s employment growth over the next ten years) and Holbeck Urban Village close to the city centre.

Lets just hope that Leeds hoteliers have more success than their football club. With a ‘For-Sale’ sign hanging over the Elland Road based club, Robin Binks of the Corporate Finance team at Deloitte has been appointed to assist Leeds United overcome some of their off-pitch challenges – however not even Deloitte can help them on the pitch.

Notes: all analysis is in UK £.

The HotelBenchmark Survey contains the largest independent source of hotel performance data outside of North America and tracks the performance of over 6,000 hotels and 1.1 million rooms every month. Four regional monthly rate and occupancy reports are produced covering Asia Pacific, Caribbean and Latin America, Europe and the Middle East & Africa. These are supplemented by country reports for Australia, Belgium & The Netherlands, Germany, Italy, New Zealand, South Africa, the UK and a city survey for London. Annual profitability surveys are run across all regions of the world, whilst in Germany and London monthly profitability surveys are conducted.

For further information on the UK edition of the HotelBenchmark Survey please contact Rob Gray on +44 (0) 20 7007 1099.

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