Little or no growth in City office values may partly explain why the City’s hotel market continues to boom in the worst recession for 80 years. Chris Bown reports.
The Olympics may have spurred developer interest in opening more hotels in the City of London, but their appetite for adding hotel rooms is clearly driven by longer term market factors.
Research conducted for City Planning shows that the current City market of 3,549 rooms in 18 hotels has the potential to grow by a further 68%, if all the known projects in the development pipeline are completed.
That pipeline is likely to be added to over coming months, as a number of budget hotel chains look to either expand in central London, or mark their arrival in the UK market.
Leading British brands Travelodge and Premier Inn are aggressively seeking sites for further openings: in the last month Travelodge opened its latest City outlet at 19-25 St Swithins Lane, and is understood to have another, 300 room site acquisition in solicitors’ hands.
Rival Premier Inn is about to lodge an application to convert an office building near Blackfriars, adding 258 rooms, its first foray into the Square Mile. It has agreed terms with LaSalle Investment Management, who will buy an 82,000 sq ft office block at 2 Dorset Rise for conversion into a 258 room hotel that could, potentially, be opened for next summer.
Newcomers from abroad with longer term aspirations to enter the London market include Dutch budget boutique brand Citizen M, which has appointed Greycoat to oversee a redevelopment above Tower Hill station which will house its first London hotel. And German budget chain Motel One is understood to be launching into the UK by signing Endurance Land and Scottish Widows’ scheme at 24-26 Minories.
Approved at the June 2011 committee, the 258 room hotel in a 17 storey block has yet to be built, so will miss the Olympic blip.
But the hotel sector in the City is not just about budget. Back in January 2011, when considering the Heron application to build a five star Four Seasons on Bishopsgate, corporation officials reported the following figures for hotel development activity in the Square Mile, clearly showing a skew towards the upper end of the market:
In addition to the Four Seasons, other high end projects include the conversion of the listed former Port of London Authority building at 10 Trinity Square. After a hiatus when the previous US owner failed to fund the project, new owner the KOP Group is starting on the Woods Bagot-designed refurbishment. The 120 room, five star luxury hotel with serviced apartments is now scheduled for completion in late 2014.
During the last few months, the new openings ready to take advantage of the Olympic demand include the City’s biggest hotel to date, the 583 room Mint, and the first of InterContinental’s Indigo brand:
Apex Hotels expects to open its Serjeants Inn site next March, but part from any quick conversions that might be achieved, such as Premier Inn’s Blackfriars project, this represents the extent of the City’s offering to Olympic visitors. Looking further ahead, a range of projects are in the pipeline (see table below).
In planning terms, this is a not insignificant shift in change of use. Taking account of the last 12 month’s openings, and the pipeline figures above, the advance of hotels in the City is absorbing or creating100,000 sq m of floorspace that otherwise might have been refurbished or redeveloped office space.
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