Take-off in Heathrow Hotel Demand forecast following Third Runway recommendation

Posted on 3 July, 2015 by Chris Grigorovsky

Following the Airport Commission’s recommendation for a third runway at Heathrow, Savills has forecast that the hotel sector will see demand rise by 42 per cent – equivalent to an additional 3,500 rooms.

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Savills also reports that the ten year average occupancy rate for airport hotels is 78-79 per cent, making the asset class very attractive to operators, despite room rates being lower than those in city centre locations.

Futhermore, robust operational performance and increasing demand from rising passenger numbers (which rose by 1.4% in 2014) is already attracting new brands to Heathrow, regardless of the proposed additional capacity.

Predominantly, chains such as Hilton and Holiday Inn have been the dominant forces in the sector, but new pod hotel concepts like Yotel and budget boutique hotel operators like Bloc are now seeking to move into the airport market.

Associate director of hotels at Savills, James Bradley, says: “These products are well suited to the short stay airport hotel guest and we expect to see this type of brand expand around Heathrow now the third runway has been confirmed.”

Marie Hickey, commercial research director at Savills, added: “The historical link between airport passenger numbers and hotel demand implies that Heathrow’s third runway will generate the requirement for new supply.

“This will lead to the introduction of new product types and brands, providing greater convenience for travellers.”




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