According to the latest joint city review by Christie + Co and STR Global, 2010 year-to-date July results for Manchester hotels show a 0.9% rise in RevPAR compared to the same period in 2009. Despite a general improvement in market conditions, monthly performance has been somewhat erratic.
Manchester is the largest regional economic centre outside of London and has been one of the UK’s fastest growing economies. Having undergone significant regeneration over the last ten years, the city has been transformed into a major business and leisure destination, attracting over 102 million visitors to the Greater Manchester area in 2008.
Manchester is a leading destination for conference and exhibitions (Manchester Central), events (M.E.N Arena) and leisure (retail and sports) and is supported by an excellent transportation infrastructure including the UK’s fourth largest airport. Key tourist attractions include The Lowry Museum, The Trafford Centre, the M.E.N Arena and Manchester United football club (Old Trafford). Greater Manchester will soon be home to the most significant media development in the UK – MediaCityUK. Covering 200 acres, this £3bn four-phase scheme is well underway and several departments of the BBC will relocate there during the course of 2011.
Trends in Hotel Market Performance
According to data provided by STR Global, Manchester hotels recorded an overall decline in RevPAR performance of 12.4% in 2009 compared to 2008. The Conservative Party conference held in October 2009 combined with a general demand upturn resulted in the first month with positive, albeit moderate, RevPAR growth (0.2%) since mid 2008. Further improvement was noticeable in November and December, even though RevPAR remained below 2008 levels.
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The following table and graphs illustrate the year-to-date 2010 results as provided by STR Global. Despite a general upward trend in performance, monthly performance has been somewhat erratic, due to a multitude of unforeseen factors, such as weather conditions in January and February, as well as the volcanic ash cloud in April.
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Trends in Hotel Supply
In line with the economic development of the city, the hotel supply in Manchester city centre has doubled over the past 10 years and now represents c. 5,400 rooms.
The most recent additions to hotel supply have been primarily positioned in the upscale segment (Crowne Plaza Manchester City Centre and Yang Sing Oriental in 2008, Park Inn Manchester Victoria in June 2009). However, the challenging economic climate has also led to some casualties with the Yang Sing Oriental closing its doors just eight months after opening in March 2009.
Another growing segment in Manchester is the aparthotel and serviced apartment sector. The economic climate and the oversupply of residential developments have led to a surge in serviced apartments across the city. The Light Aparthotel (42 units) opened in January 2009 on the top floors of Stonehurst Estates’s residential development on Piccadilly Gardens. Roomzzz, an established aparthotel operator already represented in Leeds, has taken over the former Yang Sing Oriental hotel, which reopened as the Roomzzz Manchester in December 2009.
In terms of future hotel supply, there are numerous hotel developments planned throughout the city; however, due to the macro-economic conditions and lack of funding, confirmed hotel schemes are limited. IHG is strengthening its presence in the city. Situated next to the University grounds, the Holiday Inn Express Manchester City Centre Oxford Road opened at the end of July 2010. In Salford, the 218-room Holiday Inn Media City is nearing completion and is due to open its doors in October. Construction has started on the Holiday Inn Express at Smithfield in the Northern Quarter and should complete by the end of 2011.
Travelodge has secured three new sites in the city centre at Piccadilly Gardens (157 rooms), M.E.N Arena (200 rooms at the former Boddingtons’s brewery site) and Manchester University (100 rooms on Upper Brook Street). Plans have also been submitted for a 156-room Travelodge outside of the city centre in Radclyffe Park, Ordsall. These developments will boost the number of Travelodge properties within the Manchester area to 12.
In June 2010, Britannia Hotels submitted a planning application to turn the former London Road fire station into a 227-room four-star hotel; however Manchester City Council has issued a compulsory purchase order to buy the building and the future of this development is still uncertain.
As economic conditions improve in forthcoming years, there is little doubt that a number of schemes will resurface and hotel supply in the city centre will be on the rise again.
Angie Robinson, Chief Executive of Manchester’s Investment and Development Agency (MIDAS), is well aware that hotels continue to play an important part in Manchester’s role as a cultural and business destination. Angie says: "Hotels are an integral part of the region’s tourism operation for both cultural tourists and for business.
“As a city we are one of Europe’s most attractive and competitive places to do business. We have thousands of visitors here every week and it’s important there are enough rooms to sustain this, especially given our continued global prominence as a leisure leader, accommodating everything from world-class football to political conferences. |
Trends in Hotel Transactions
Mirroring the UK-wide trend, the Manchester hotel market has witnessed very limited transactional activity, with no significant hotel transaction since 2008.
The Campanile Manchester in Salford is currently on the market as part of an 18-strong portfolio marketed by Christie + Co on behalf of Starwood Capital’s Louvre Hotels. The 279-room Hilton Manchester Deansgate hotel, marketed together with Liverpool’s Radisson Blu hotel, does not appear to have changed ownership yet. Meanwhile, the Hilton Manchester Airport has just been brought to market by the Royal Bank of Scotland as part of a portfolio of six UK Hilton hotels with a total asking price of £200m.
Outlook
Manchester is a key economic centre, with further growth prospects in forthcoming years. The wide ranging economic make up of Manchester, together with large new economic development projects such as MediaCity and Spinningfields, to name but two, will ensure that it remains one of the strongest hotel markets in the UK.
As macro-economic conditions continue to improve and key events are held in the city, such as the Labour Party Conference at the end of September, further improvement in trading performance should materialise during the remaining months of 2010 notwithstanding any unforeseen events.
The Manchester hotel market has shown a remarkable ability to absorb new hotel supply over the last few years. Whilst confirmed hotel schemes are currently limited, there is little doubt that as the economy picks up, new hotel projects will start moving forward again.
For further information please contact:
Carine Bonnejean
Associate Director
Christie + Co
Direct line: +44 (0) 20 7227 0714
Email: carine.bonnejean@christie.com
Konstanze Auernheimer
Director of Marketing & Analysis
STR Global
Direct line: +44 (0) 20 7922 1961
Email: kauernheimer@strglobal.com
Andreas Scriven
Director & Head of Consultancy
Christie + Co
Direct line: +44 (0) 20 7227 0782
Email: andreas.scriven@christie.com
Mark Wingett
Head of Media Relations
Christie + Co
Direct line: +44 (0) 20 7227 0794
Email: mark.wingett@christie.com
Notes to Editors
Christie + Co use desk-based research and experienced local industry specialists to produce bi-monthly city reviews. Hotel trading data is provided by STR Global.
Founded in 1935, Christie + Co is the leading firm of surveyors, valuers, consultants and agents specialising in the hospitality, leisure, retail and care sectors. Currently employing close to 350 professional and specialist staff, it has 15 offices throughout the UK — with valuation, agency, investment and consultancy teams focused on its key sectors. Christie + Co’s international operations are based in Barcelona, Berlin, Frankfurt, Helsinki, Lyon, Marseilles, Munich, Paris and Rennes.
STR Global provides clients — including hotel operators, developers, financiers and analysts — access to hotel research with regular and custom reports covering over 40,000 hotels. STR Global provides a single source of global hotel performance data, offering concise, accurate and thorough industry research worldwide.
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