Airport Expansion will see Hotel Demand soar

Posted on 9 May, 2015 by Cliff Goodwin

Any expansion of London’s two main airports will trigger a massive demand for more hotel rooms, a property services company has warned.

Airport Expansion will see Hotel demand soar

Ahead of this summer’s publication of the Airports Commission report examining the three potential options for increasing passenger capacity at Britain’s two busiest airports, Savills is claiming that a second runway at Gatwick would require an extra 4,800 rooms and a third runway or extended north runway at Heathrow would need an additional 4,000 bedrooms — just to keep pace with demand.

Relatively robust operational performance and increasing demand caused by rising passenger numbers at Gatwick and Heathrow — up by 7.5 per cent and 1.4 per cent respectively in 2014 compared to the previous year — are already attracting new hotel brands and concepts, even without extra runway capacity.

Savills is also reporting that 10-year average occupancy rates for airport hotels are around 78 to 79 per cent. These figures make them particularly attractive to operators, despite average daily rates often being significantly lower than their city centre counterparts.

“The historical link between airport passenger numbers and hotel demand means that, regardless of which option the Airports Commission chooses, it will generate demand for new supply,” explained Marie Hickey, commercial research director at Savills. “In turn, this will introduce new product types and brands providing greater convenience for travellers.”

While mid-market branded operators such as Hilton and Holiday Inn have historically colonised the market, new pod hotel concepts such as Yotel and budget boutique operators such as Bloc are entering the scene.  CitizenM, while not found at UK airports, does have sites in other European airport markets such as Schipol in Amsterdam.

James Bradley, Savills’ associate director of hotels, comments: “This type of product is well suited to the short stay airport hotel guest and we expect to see these types of brands expand further into the UK airport markets.”

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