The budget hotel sector continues to dominate existing and future capacity in the UK, according to a new report released this week.
The HVS AM:PM Q4 2015 Hotel Bulletin shows that the budget sector makes up more than half of the existing capacity in the UK hotel market and a third of hotels in the pipeline for the next three years.
The outer circle in the chart below shows existing capacity while the inner circle shows planned capacity in the pipeline.
The report also says that London rates may be squeezed.
The authors say, "Over 10,000 bedrooms opened in the UK in 2015 and a further 16,000 are expected to come onto the market in 2016. Approximately 7,000 bedrooms of these are due to open in London, more than double the number opened in 2015. Even London hoteliers, used to robust performance in almost any conditions, may be concerned by this large impending increase in supply given recent limited demand growth in the city."
The London hotel market has been very busy in the fourth quarter. Hilton opened the five star Hilton London Bankside, while Travelodge opened the 80-bedroom Travelodge London Hackney and the 78-bedroom Travelodge London Richmond. Meanwhile, IHG opened the five star 453-bedroom InterContinental London — the O2.
The report also highlights budget growth in Edinburgh where the market is due to gain 1,140 bedrooms in 2016, over half of which (682 bedrooms) relate to two Premier Inns and three hub by Premier Inns. This increases Edinburgh's supply of budget hotel bedrooms by 18%.