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East Anglia Future 50

Is an oversupply of rooms harming hotels?

PUBLISHED: 09:39 17 March 2010 | UPDATED: 08:55 02 July 2010

Under construction - the Travelodge on St Vedast Street, which opened in December. Photo: Sonya Duncan

Under construction - the Travelodge on St Vedast Street, which opened in December. Photo: Sonya Duncan

Sam Williams

With chains including Travelodge, Hilton and Premier Inn increasing their presence in the city, independent hoteliers are warning an oversupply of rooms is endangering their trade.

Marcus Pearcey, owner of Distinctive Hotel Group, at the Oaklands Hotel, Thorpe St Andrew. Photo: Steve Adams

With chains including Travelodge, Hilton and Premier Inn increasing their presence in the city, independent hoteliers are warning an oversupply of rooms is endangering their trade. SAM WILLIAMS reports.

In December last year, Travelodge opened its third Norwich hotel, and rivals Hilton and Premier Inn may also be set to increase their presence in the city in the coming years.

But independent hoteliers are warning an oversupply of rooms could jeopardise their livelihoods.

Bill Heath, managing director or Arlington Hotel Group. Photo: Angela Sharpe

The 81-bed Travelodge, which opened on St Vedast Street in the city centre, is the latest addition to the city's hotel offering, the capacity of which has risen by 662 beds since the start of 2005 - a 67pc increase.

And it doesn't stop there.

A 125-bed hotel is planned as part of the 400-home St Anne's Wharf development between King Street and the River Wensum, possibly operated by Hilton, although the company says no decision has been made.

Another major hotel is also planned for the St James Place development off Barrack Street, along with a 100-bed establishment proposed at the Harford Place mixed use development on Hall Road.

At the Royal Norfolk Showground, planning permission has been granted for a 150-bed “destination hotel” with spa and conference facilities, and last October Whitbread Hotels and Restaurants submitted plans for a 22-bed extension to its Premier Inn hotel at the showground.

Independent hoteliers warn the expansion is already having a detrimental impact on occupancy levels across the city and could drive smaller operators out of business.

Bill Heath, managing director of Arlington Hotel Group, which runs five hotels in Norfolk and Suffolk, said his Norwich hotel, The George Hotel off Newmarket Road, had gone from being the group's best performing to the worst in five years.

Mr Heath said: “In Norwich our figures have dropped massively because there are so many rooms available in the city.

“Average room rates across the city have dropped, and occupancy has dropped, because people have so much choice.

“Diversity is good, but to saturate the market as has happened here is just crazy.”

And he criticised council planners for granting permission for the new hotels without putting in the effort to draw visitors in to the city.

“It seems as if the council looks at the extra rates it is going to get from new hotels but doesn't invest in the infrastructure to get the city promoted to visitors properly,” he said.

“Unless this happens I don't think there will be any independent hotels left in a few years' time as they will all go bust.”

Marcus Pearcey, owner of Distinct Hotels Group, which includes the Georgian House Hotel on Unthank Road and Oaklands Hotel in Thorpe St Andrew, warned independent hotels were already being squeezed by competition from the chain hotels.

He said while his business had seen 12pc growth last year, the market had become much tougher, and said the growth had been partly down to a focus on food and functions rather than growing occupancy.

“We are getting into the scenario in which independent hotels are being pushed out of Norwich by the chain hotels, which are opening up left, right and centre,” he said.

“The chain hotels have global distribution networks that no independent can compete with.

“There seems to be a lack of consultation with hotels. It seems that anyone can build a hotel in Norwich.

“You have to be a lot sharper to survive and a lot of independents are finding it tough.”

And the view was shared by a number of other independent hoteliers at a meeting last month organised by tourism body Visit Norwich.

Jill Reynolds, of the Best Western Annesley House Hotel on Newmarket Road in Norwich, said she was “deeply concerned” about an oversupply of rooms in the city, adding: “It's so important we don't get any more hotels built in the next few years.”

And Philip Search, of the Broad House Hotel in Wroxham, said while his occupancy and average rates grew in 2009, more work was needed to promote Norwich and the Broads as a tourism destination to bring in new customers.

He said: “The city does need something to support all these extra rooms and a few large international events would make a big difference.

“We also need to have a joined up tourism strategy.”

But Steve Morphew, leader of Norwich City Council, defended the authority's record on promoting Norwich as a visitor destination, and said the fact hotel chains were continuing to build showed there was still demand for more beds.

He said there were plenty of opportunities to attract people to visit and stay in the city, including the growth of the Norwich Festival, the 2012 Olympics and the city's bid for Capital of Culture status.

He said: “What we are trying to do is attract people to come to the city, and try and fill the beds we have.

“There is plenty of scope to bring more people to the city, and the fact is there has been a shortage of capacity in hotel rooms for a number of years.

“The hotel chains don't build unless they think there is a market need, and they have said to me that they think there is.”

He added: “We can't stop any hotels if people want to build hotels, there is nothing that says we are in a position where we can or should limit hotels. We are in the market here.”

Clare Millar, head of Visit Norwich, said the “remarkable” level of investment in Norwich hotels in recent years reflected a “buoyant” sector and “burgeoning interest and confidence in Norwich as a city destination”.

But she said more effort was needed to promote the city as a tourist destination.

She said: “All this activity and interest from operators and investors shows that Norwich is firmly recognised as a highly attractive place both to visit and to invest.

“But this is not the time for resting on our laurels. In order to ensure occupancy levels remain high, the city will need to continue to be marketed aggressively in key sectors.

“We at Visit Norwich look forward to playing our part in meeting that challenge.”

A Hilton Worldwide spokesman said: "Hilton is in an exciting phase of growth and we are looking at many locations around the UK to introduce various brands from our portfolio.

“Norwich is a destination which has attracted our interest, though no hotel developments have been confirmed at this stage."

Debbie Husband, Travelodge regional director, said the company's Norwich hotels were performing well, including the latest premises, and she said the popularity was partly down to the company's low prices and the reputation of the brand.

She said: “Although the UK hotel market has some way to go in its recovery from the recession, we are pleased with the performance of our three hotels in Norwich; including the recent opening of our new 81-bed hotel on St Vedast Street.

“Our hotels in Norwich have a good mix of both leisure and business customers staying with us due to our low prices."

The company declined to comment on the impact of the increase in hotel rooms on independent hoteliers.

Hotel growth in Norwich (source: Visit Norwich)

Hotel stock in the Norwich area

Jan 2005983

Jan 2010 1,645

Change: +662 (+67pc)

New hotels

2005

Premier Inn, Duke Street117 rooms

Travelodge - Norwich bus station104 rooms

St Giles House Hotel24 rooms

2007

Holiday Inn Norwich City150 rooms

Express By Holiday Inn78 rooms

Dec 2009

Travelodge, St Vedast Street81 rooms

Planned hotels

Hilton Garden Inn, St Anne's Wharf 125 rooms (expected 2011)

Bannatyne's Health Club, Thorpe St Andrew50 room hotel. Status unknown.

St James Place, Whitefriars130-180 bed hotel.

Royal Norfolk Showground150 bed “destination” hotel - planning permission granted

Harford Place80-100 bed budget hotel proposed

Total: 535-605

Hoteliers confident of a busy summer

Hoteliers are confident of a busy summer this year despite a fall in bookings as snow kept early visitors away.

A survey of 550 hotel rooms in Norfolk by accountants and business advisors PKF showed occupancy levels dropped from 56.3pc in January 2009 to 48pc in the same month this year.

Average room rates also dropped 7.2pc to £61.38, the survey found.

But PKF said optimism remained ahead of the summer, with hopes more people will holiday in the UK rather than abroad as economic uncertainty remains and as the pound remains weak against the euro.

Michael Muskett, regional managing partner for PKF, said: “Things are already picking up and there remains much confidence among our hotel clients that they will enjoy another busy summer, at least as good as last year.

“Although the country is officially out of recession, economic difficulties are still affecting many UK families and this, coupled with the weakness of the pound, could mean that many decide to holiday in the UK this year.”

Aileen Mobbs, director at the Imperial Hotel in Great Yarmouth, said the snow led to some cancelled room and restaurant bookings, but they were balanced out by offshore workers grounded by the weather who had to stay longer.

She said: “Business is picking up to last year's levels which were very good. It's early yet to predict the summer trade because people no longer book holidays way ahead, but on the internet. I'm hopeful that figures will be at least as good as last year's which were excellent.”

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