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40% of UK hotels independent - 7% are classed as luxury

In the United Kingdom, almost 40% of the hotel rooms are unbranded whereas more than 60% of hotel properties are chain hotels. In the last 18 months, demand has grown for independent hotels on average at around 2% to 3%. Chain hotels, however, experienced an increase up to 7% in the same measure on a 12 month moving average basis. Supply growth for independent hotels remained near 0% over recent months, while room supply for branded hotels was at around 2% on a 12 month moving average basis.

12MMA% Change - Independent

12MMA% Change - Chain Hotels

Independent Hotel Performance

Hotel demand was clearly impacted in the aftermath of the global financial crisis, where occupancy and average daily rate (ADR) reported the lowest levels in 2009. Ever since, both measures have been recovering for independent hotels, achieving occupancy levels of 72.9% and ADR levels of £119.24 in August 2014 Year-to-Date (YTD). While independent hotels are typically below the occupancy levels seen in chain hotels; in terms of ADR in the UK, the independent hotels perform considerably above the branded hotel rates which reached £78.77 in August 2014 YTD.


Class Distribution UK

The difference in ADR between chain and independent hotels can also be related to the class distribution. While almost a third of all branded hotel rooms fall under the economy segment, the independent hotels only have a fifth of their rooms in the lowest price class. Similarly, 45% of the existing room supply of independent hotels is classed as Luxury, Upper Upscale and Upscale, while only 37% of the chain hotels are in the upper tiers.

Pipeline

45% of the rooms in the UK active pipeline are expected to be unaffiliated but only 16% of those are currently under construction. Greater London will absorb a good 40% of all independent projects while Southeast England (Heathrow, Portsmouth) and Northwest England (Manchester, Liverpool) seem to be the hot spots in the region. Devon/ Cornwall Regional and Blackpool are among the markets with the highest concentration of independent hotels (>80%), while in particular the airport markets such as Heathrow (91%), Gatwick (84%), as well as Manchester (84%), Liverpool (84%) and Leeds (81%) are dominated by chain hotels.

Independent hotel projects scheduled to open in the first half of 2015 include the Gainsborough Hotel & Spa Bath (98 rooms), the Resorts World @ The NEC Solihull (178 rooms), The King Street Townhouse Manchester (40 rooms), the Hotel Gotham Manchester (66 rooms).

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