The UK remains an attractive market for hotel development, with investors and operators continuing to seek opportunities in key locations. Despite its challenges and a general slowdown in construction activity, approximately 11,500 rooms are underway across the regional UK markets.
Cities such as Manchester and Edinburgh are driving the construction pipeline in the regions, with these markets topping the number of rooms under construction and as a share of inventory. However, this year, markets such as Leeds have also witnessed some of the biggest increases in room inventory after a long spell of no new openings.
As the year ends, CoStar takes stock of which properties have made their mark in the regional UK hotel sector.
Hyatt made a big entrance into the Leeds hotel market by opening the dual-branded Hyatt House and Hyatt Place property. The total room count amounts to 305, making it one of the biggest openings in the city for some time. Leeds had not witnessed any major openings over the past decade, and as such, the additional rooms have had an impact on the market’s performance.
The Hyatt Place hotel offers the bulk of its rooms, with 217 units, aimed at shorter stays, while Hyatt House features 88 apartment units, catering to long-stay guests. The two brands share facilities, including a fitness centre, meeting space, a 24-7 marketplace, and food and beverage outlets, such as a rooftop bar and restaurant.
Dual-branded properties tend to achieve greater economies of scale, supporting profitability, while complementing one another. Opened during the first quarter of the year, the hotel would have been able to capitalise on demand from the UKREiiF conference in May, which fills the entire city’s accommodation provision.
Named as IHG’s first net-zero carbon hotel, the Voco Zeal Exeter Science Park opened earlier this year on the outskirts of Exeter. Developed by Zeal Hotels, the property has been designed to operate entirely on renewable and solar energy, with the building achieving a BREEAM Outstanding rating.
It has also been built with materials that generate lower carbon emissions, further supporting the hotel’s net-zero credentials. Despite being located on the outskirts of the city of Exeter, it is within the Exeter Science Park, accessible via the local road network, appealing to both business and leisure trade. The hotel is likely to have capitalised on elevated demand levels in August and September, associated with the Women’s Rugby World Cup, as the local stadium hosted several matches.
The anticipated Treehouse Hotel Manchester opened in the first quarter of the year, following a two-year delay. Delays have not been uncommon within the hotel sector, especially when retrofitting buildings, due to the challenges that arise. The hotel is set in the former Renaissance Manchester City Centre, which closed in 2020 due to weak demand, worsened by the pandemic.
Following a £25 million investment, the hotel reopened under the Treehouse brand, offering 224 rooms, an all-day restaurant, meeting space, a gym and a screening room. The property also prioritises sustainability by using repurposed decorations and sourcing food locally, reinforcing the hospitality sector's commitment to a more sustainable future. It is the brand’s second property in the UK, following its London opening in 2019. The hotel likely appeals to a varied customer base, given its positioning, location, and amenities.
TFE, Adina’s parent company, opened its first property in the UK with the 56-room Hobson House Cambridge by Adina towards the end of the year. The group acquired the property from Rogue City Hotels alongside The Wellington in Glasgow, which has also recently opened as an Adina aparthotel offering 98 apartments, expanding the brand’s portfolio in the UK. The serviced apartment property is in a Grade II-listed building, formerly a police station, with many of its original features integrated into the design. The Hobson House Cambridge by Adina offers 58 apartment rooms, a restaurant, a bar, meeting space, and a shared workspace in the lobby area. Given Cambridge’s demand profile, the property is expected to appeal to both leisure and business travellers, including those with longer stays.
Ennismore introduced The Hoxton Hotel to the Scottish market by opening its Edinburgh property this summer. The hotel is in the former Grosvenor Hotel building, previously a Hilton, which was permanently closed and has since been turned into the Hoxton Edinburgh.
Acquired by Cedar Capital Partners during the first quarter of the year as part of a portfolio of five Ennismore hotels, the property offers 214 rooms and suites across 11 joined-together Georgian townhouses, three self-contained three-bedroom houses for longer-stay guests, a restaurant and meetings and events space.
Given Edinburgh’s primarily leisure-driven demand profile, the hotel will appeal to those going on holiday and attending events in and around the city. Its food and beverage facilities are likely to attract external residents as well due to the brand’s reputation.
Although under-construction rooms have trended downwards since their peak during the pandemic years, recent data points to a slight increase in hotel development, with the final pipeline also ticking upwards over the past 12 months. This suggests that some of the challenges faced by the sector may be easing, with some industry players citing some more positive trends lately.
Asset conversions have also been crucial to the growing hotel development pipeline, as declining office and retail values have presented operators with opportunities for expansion, with cities like Edinburgh witnessing this trend. Nonetheless, supply-side risks, outside of cities with above-average stock under construction, are expected to be limited in the short term, allowing hoteliers to focus on driving operational and financial results.