Title: Attracting Investment to your Destination
1Attracting Investmentto yourDestination
Hotel Futures TMI Workshop Newcastle 2005
- TMI WORKSHOP
- 22 September 2005
- Newcastle
- Lynn Thomason Andrew Keeling
- HOTEL SOLUTIONS
Attracting Investment to your Destination
2Introducing Hotel Solutions
- A partnership consultancy Tourism Solutions
ACK Tourism - Background in hotel development, operational
management, regional tourist boards - Hotel Futures Studies
- Identifying development potential
- Attracting hotel investment
- Informing policies and site allocations
- Managing developer interest - maximising
destination benefit
3Workshop Format
- A focus on the hotel sector
- Wider principles re the investment
decision-making process and destination response - Interactive tell us what you need help with
- Lending expertise
- Understand marketplace what drives these
investment decisions - How to gear up to facilitate the development
process - Knowledge tools ACTION
4We need a new hotel because..
- Were short of accommodation for events
- We dont have enough hotels to support our
conference centre - We need a 4 star hotel to attract more conference
business - Our existing hotels are not of a very high
standard - We dont have a decent hotel in the town centre
5We need a new hotel because..
- We need a 4/5 star hotel to improve the image of
our destination - Our competitor destinations have a better range
and quality of hotels - We need better quality hotels/ better located
hotels to attract short break business - We need a hotel to support our new attraction
6We need a new hotel because..
- We havent got a decent hotel for our VIP
visitors - We need a good hotel for civic functions
- We need a 4/5 star hotel to help regenerate our
destination
7Workshop Objectives
8National Hotel Performance Trends
- 3 key performance indicators
- Room occupancy
- Achieved room rate (ARRs)
- Rooms revpar
- Provincial 3/4 star occupancies dropped slightly
between 2001 and 2003 (to around 70) - increased
in 2004 (to 71) but may drop back slightly in
2005
9National Hotel Performance Trends
- Provincial 3/4 star ARRs were largely static
between 2001 and 2003 (at around 62.50) but
have increased in 2004 (to 64) and 2005 (to67
YTD) - Higher quality 4 star hotels in major cities and
business destinations are achieving ARRs of 80
in 2005 - 4 star country house hotels achieve lower
occupancies (60), but high ARRs - (100)
10National Hotel Performance Trends
- 3 star hotels in rural locations and market towns
often achieve lower occupancies (55-58) and ARRs
(around 50) - London 3/4 star hotels achieve much higher
occupancies (80) and ARRs (90) they dropped
sharply between 2001 and 2003 recovered in 2004
but look likely to drop back in 2005
11National Hotel Performance Trends
- The business market is the key driver of hotel
performance - Leisure demand helps to boost occupancies at
weekends and holiday periods but is often at
lower rates - A good mix of business and leisure demand is
needed to achieve high occupancies and ARRs
12National Hotel Performance Trends
- Budget hotels achieve very high occupancies
(80-85) - They attract a good mix of business, contractor,
VFR and leisure demand - Budget hotel ARRs are close to their published
rates (exVAT) around 40 - Upper-tier budget hotels achieve high occupancies
(70-80) and ARRs of around 55
13National Hotel Development Trends
- Rapid expansion of the budget hotel sector
- Continued expansion of the main budget brands
- (Travelodge, Premier Travel Inn)
- New budget brands
- (Ibis, Days Inn, Sleep Inn)
- The development of the upper-tier budget hotel
sector/ new generation 3 star hotels (Express by
Holiday Inn, Ramada Encore, - Tulip Inn,Dakota)
14National Hotel Development Trends
- Some 4 star development primarily in city
centre locations - (Radisson SAS, Park Plaza, City Inn, Macdonald,
Marstons) - Emergence of boutique hotels
- (Hotel du Vin, Malmaison, Alias, Niche)
- Renewed interest in golf hotel development
- (Macdonald, De Vere)
15National Hotel Development Trends
- Upgrading of country house hotels
- (Hand Picked)
- Some 3 star development mainly in major cities
- (Jurys Inn, Novotel, Village)
- Leisure operators (attractions, football clubs,
race courses) developing hotels
16National Hotel Development Trends
- Some development of serviced apartments
interest from suite hotel operators - Some niche hotel products have expanded
- (Warners Just for Adults, Luxury Family Hotels)
17The Market Conditions for New Hotel Development
18The Industry ViewKey Performance Indicators
- Occupancy 70
- Rate (ARR) ex. discounts, vat, breakfast
- Budget /- 40
- Upper tier budget 50-55
- 3 star 55-65
- 4 star 70
- Luxury 100
- Significant levels of denials
- A strong corporate base (weekday 90-100)
- Something for the weekend
- The state of the current hotel supply
- Other planned hotels
19The Industry ViewSite Location Requirements
- Will you make the hit list?
- City/town population 100,000 150,000
- A growing economy evidence of development
- Strategic location good access, proximity to
business users and leisure attractors - Town centre and out of town
- Site size 1-3 acres
- Realistic land values (5k-15k/room)
- Variation by size/ standard /geographic spread
- Most development opportunistic evidence base
20The Industry ViewBarriers to Investment
- Identifying and acquiring sites
- Availability of land/site values/competitive uses
- The planning process
- Policy plan-making/handling enquiries/planning
advice/processing - Sourcing information and contacts
- Sector supply performance data/tourism
data/economic business data/key local authority
other contacts
21Hotel Investment Action Plan
- Know your market realistic aspirations
- Produce an evidence base KPIs/ analysis of
potential - Tackle the site issues
- Plan positively for hotels the LDF opportunity
- A joined up approach within the destination
- Pro-active targeting of development
- Be responsive focused investment materials
- Keep your finger on the pulse