HASTINGS, BEXHILL & 1066 COUNTRY HOTEL & GUEST ACCOMMODATION FUTURES Final Report Prepared for: Sea Space April 2007 Hastings, Bexhill and 1066 Country Hotel & Guest Accommodation Futures CONTENTS EXECUTIVE SUMMARY...................................................................i 1. INTRODUCTION......................................................................1 1.1 Background to the Study...........................................................................................1 1.2 Objectives of the Study..............................................................................................2 1.3 Study Methodology....................................................................................................3 2. THE UK HOTEL SECTOR ...........................................................5 2.1 National Demand Trends...........................................................................................5 2.2 National Supply Trends...............................................................................................7 2.3. Trends in UK Seaside Resort Hotel Development................................................20 3. HASTINGS, BEXHILL & 1066 COUNTRY HOTEL AND GUESTHOUSE SUPPLY .................................................................24 3.1 Current Supply...........................................................................................................24 3.2 Recent Changes in Hotel Supply...........................................................................30 3.3. Planned Development of Existing Hotels..............................................................35 3.4. Potential New Hotels.................................................................................................36 3.5. Summary of Key Points.............................................................................................37 4. CURRENT DEMAND ..............................................................38 4.1 Occupancy................................................................................................................38 4.2. Achieved Room Rates.............................................................................................40 4.3. Patterns of Demand.................................................................................................41 4.4. Key Markets................................................................................................................42 4.5. Market Trends.............................................................................................................45 4.6. Denied and Lost Business.........................................................................................47 4.7. Future Prospects........................................................................................................49 4.7. Summary of Key Points.............................................................................................50 5. THE POTENTIAL FOR GROWTH..............................................53 5.1. The Strategic Vision...................................................................................................53 5.2. Future Market Prospects..........................................................................................58 6. FUTURE HOTEL & GUEST ACCOMMODATION DEVELOPMENT OPPORTUNITIES ..........................................................................62 6.1. Hastings.......................................................................................................................62 6.2. Bexhill...........................................................................................................................64 6.3. Battle and Surrounding Area..................................................................................64 6.4. Rye and Surrounding Area......................................................................................65 6.5. Other Hotel and Accommodation Products.......................................................65 7. THE HOTEL DEVELOPER PERSPECTIVE...................................66 7.1 Hotel Developer Requirements..............................................................................66 7.2 The Nature of Hotel Investment..............................................................................67 7.3 Hotel Developer Interest in Hastings, Bexhill & 1066 Country............................68 7.4 Barriers to Investment...............................................................................................71 7.5 Site Assessments.........................................................................................................72 8. THE POLICY CONTEXT..........................................................78 8.1 The Big Picture............................................................................................................78 8.2 Local Policy and Development Priorities..............................................................82 8.3 Hotel Sector Planning Policy Guidance...............................................................84 8.4 Future Policy Direction..............................................................................................88 Hotel Solutions April 2007 Hastings, Bexhill and 1066 Country Hotel & Guest Accommodation Futures 9. MOVING FORWARD ............................................................92 9.1 Positive Planning to Support Hotel Development...............................................92 9.2 Hotel Investment Marketing....................................................................................92 9.3 Incentivising New Hotel Development.................................................................93 9.4 Supporting Existing Hotels and Guesthouses.......................................................94 9.5 Developing the Market............................................................................................95 APPENDICES 1 - Hotels Interviewed 2 - Hastings, Bexhill & 1066 Country Supply of Hotels and Guesthouses 3 - Hastings & Bexhill Company Survey 4 - Extract from DCLG Good Practice Guide on Planning for Tourism 5 - Developer Consultations 6 - Developer & Operator Contact Details Lynn Thomason Andrew Keeling Hotel Solutions Hotel Solutions Deleanor House Mill Field House High Street Mill Fields Coleby Bassingham Lincoln Lincoln LN5 0AG LN5 9NP t. 01522 811255 t. 01522 789702 e. [email protected] e. [email protected] Hotel Solutions April 2007 Hastings, Bexhill and 1066 Country Hotel & Guest Accommodation Futures EXECUTIVE SUMMARY ___________________________________________________________________________________ Introduction • The Hastings, Bexhill and 1066 Country1 Hotel and Guesthouse Futures Study has been commissioned by Sea Space. On behalf of the Hastings & Bexhill Economic Alliance, through Tourism South East to provide a robust evidence base of the current and potential future demand and development potential for hotel and guesthouse accommodation in Hastings, Bexhill, Battle, Rye and surrounding rural areas. • The study findings will be used to: (cid:1) Identify the potential opportunities and requirements for securing new hotel development in these locations; (cid:1) Gauge the likely impact of new hotel development on existing hotels and guesthouses; (cid:1) Assess the threat of further losses of hotel and guest accommodation in the area; (cid:1) Establish the potential and requirements for retaining, upgrading, repositioning and developing existing hotels and guesthouses; (cid:1) Provide an evidence base to inform the new planning policies for hotels and guesthouses that will be included in the Local Development Frameworks for the two local authority areas both in terms of policy formulation and site allocation; (cid:1) Provide information to assist in determining hotel development and change of use applications; (cid:1) Feed into hotel investment marketing activity for the area. 1 For the purposes of this study defined as Hastings Borough and Rother District. 1066 Country is a marketing brand used to promote these two local authority areas together with Pevensey and Herstmonceux in Wealden District. These parts of Wealden have not been included in the study. Hotel Solutions i April 2007 Hastings, Bexhill and 1066 Country Hotel & Guest Accommodation Futures • The Study has involved the following modules of research: (cid:1) a review of national hotel performance and development trends, with a particular focus on hotel development trends in UK seaside resorts; (cid:1) an audit of the existing supply of hotel and guest accommodation and assessment of recent and planned future changes to the area’s serviced accommodation supply in terms of closures and planned hotel developments; (cid:1) interviews with managers and owners of hotels and guesthouses across the area to assess recent and current hotel performance levels and trends; (cid:1) a review of relevant policy documents and research reports; (cid:1) consultations with key officers in Sea Space, Hastings Borough Council, Rother District Council and 1066 Enterprise; (cid:1) an assessment of factors that could influence future demand for hotel and guest accommodation, including the impact on demand of planned major regeneration projects; (cid:1) consultations with a sample of hotel developers to assess their interest in developing in Hastings, Bexhill, Rye and 1066 Country; (cid:1) a review of potential hotel development sites in Hastings, Bexhill and Rye; (cid:1) a telephone survey of companies in Hastings and Bexhill. Hotel Solutions i i April 2007 Hastings, Bexhill and 1066 Country Hotel & Guest Accommodation Futures Trends in the UK Hotel Market • The UK hotel industry has steadily recovered in the last 3 years following a difficult trading period between 2001 and 2003 due to the impact of major events and crises, including the Foot & Mouth epidemic, 9/11, the Iraq War and the SARS scare. Provincial hotel performance has been more stable than for the UK as a whole, the latter being affected by London hotel performance, which has been more significantly influenced by international events. Provincial hotel occupancies have been relatively stable over the past 5 years with average annual room occupancies running at around 70-71%. Achieved room rates grew only slightly between 2001 and 2003 but have risen sharply in the last 3 years to reach a record high of £70.02 in 2006. • Both established and new hotel brands have continued to expand in the UK. The budget hotel sector has grown strongly, with continued expansion by Premier Travel Inn, Travelodge and Express by Holiday Inn, and the emergence of new budget hotel brands. In the 3/4 star market small boutique and town house hotel chains, such as Hotel du Vin and Malmaison have rapidly expanded. The development of large branded 3 and 4 star hotels has been focused primarily in major city centres. • Recent years have seen something of a renaissance in hotel development and investment in UK seaside resorts. Key trends have been the development of boutique and budget hotels. Hotels have also been developed on caravan parks, holiday villages and theme parks and are proposed linked to conference centres and waterparks. Adult only hotel resorts have also developed in some resort locations. Hotel Solutions ii i April 2007 Hastings, Bexhill and 1066 Country Hotel & Guest Accommodation Futures Current and Planned Hotel Supply • Our research has identified a total of 79 hotels and guesthouses2 in 1066 Country with a total of 1,145 letting bedrooms. • Supply has reduced significantly in Hastings and Bexhill over many years, with further guesthouses in the process of closing down or wanting to exit the market in both locations. • Quality appears to be low generally in Hastings, with many hotels and guesthouses having received little or no investment for some considerable time and few owners currently contemplating upgrading and refurbishment. There have, however, been some signs of new investment recently with the opening of the Zanzibar and the investment that is being made in the White Rock Hotel. The resort has also seen recent budget hotel development with the conversion of the Cinque Ports Hotel to a Travelodge. • The supply is very limited in Bexhill and continues to reduce here, with the impending closure of at least two guesthouses. There has been some recent investment, however, most notably in the Cooden Beach Hotel. • The stock of accommodation in the Battle area comprises mainly rurally located hotels. There are few hotels and guesthouses in Battle itself. Standards are not particularly high, although there are some signs of investment beginning to take place in hotels here. • Quality appears to be good in Rye, with investment happening in existing hotels here, most notably the refurbishment of the George. • A number of hotel projects have been mooted in Hastings, Bexhill and Rye. Some are at a fairly advanced stage in terms of planning permission and feasibility studies. Others are longer term, and in some cases more aspirational, proposals for new hotels. 2 Our analysis of current supply includes all inspected and non-inspected hotels and guesthouses with 5 bedrooms or more. Smaller guesthouses and B&Bs have not been included. Hotel Solutions iv April 2007 Hastings, Bexhill and 1066 Country Hotel & Guest Accommodation Futures Current Hotel Demand • The hotel and guesthouse market across 1066 Country is primarily leisure driven and seasonal. The corporate market is weak and there is very little residential conference business. • 3 star hotel occupancies are low by national standards at an average annual room occupancy of around 55% in 2006. The lack of corporate and residential conference demand limits the occupancies that 3 star hotels can achieve to around 60%. Only one hotel is achieving a significantly higher occupancy than this. • Budget hotel occupancies are high in Hastings (an average annual room occupancy of 76% in 2006) as they attract a good mix of demand from the business, contractor, leisure and visiting friends and relatives markets. • Average annual room occupancies are low for guesthouses, typically around 40%. Occupancies are very low (down to 20-30%) for some of the lower quality 3 star/diamond guesthouses located away from the seafront. • Weekend occupancies are stronger than weekday occupancies across 1066 Country. They are generally high in the summer months, with many hotels and guesthouses regularly denying business at weekends at this time of year, particularly on Saturday nights. Weekend denials are particularly high in Rye. • Weekday occupancies are generally low other than for budget hotels, in the peak summer months and for one or two hotels and guesthouses that are trading well in the corporate or contractors markets. • Achieved room rates3 are very low (around £45-50) for 3 star hotels in Hastings and Bexhill, and lower still for 2 star hotels. This appears to be primarily to do with the quality of the hotels in the resorts and the markets that some of them are catering for, particularly in terms of coach holiday and contractor business. There is evidence that people are prepared to pay higher prices for better quality hotel accommodation here, however. 3 The net amount of rooms revenue that hotels achieve per room after deduction of VAT, discounts, commission charges, breakfast and any other meals included in the room price. Hotel Solutions v April 2007 Hastings, Bexhill and 1066 Country Hotel & Guest Accommodation Futures • Achieved room rates are high (£70-80+) for some country house hotels in the Battle area and generally for 3 star hotels in Rye, primarily due to the high prices that they command for their rooms at weekends. • Prices charged by Hastings guesthouses are low (typically £55-65 B&B for a double en-suite room). The Zanzibar has shown that there is a market for quality guest accommodation in Hastings that people will pay higher prices for. • The corporate market is weak across 1066 Country and largely static. Companies in Hastings do not generally use the hotels in the resort as they do not offer the quality that they require or in some cases because hotels outside Hastings are more conveniently located for their offices. • Residential conference demand is limited although a few country house hotels and 3 star hotels in Rye have had some success recently in attracting small residential conferences out of London. There is some evidence that companies in Hastings tend to use hotels further afield for residential conferences and meetings as the hotels in Hastings, Bexhill and Battle are not sufficiently large or of an adequate standard to meet their requirements. Such demand is not significant, however. • Hastings does not currently attract association conferences in the way that other seaside resorts do, although has previously hosted the Green Party conference. This appears to be due to the lack of a suitable conference venue in the resort, the limitations of the accommodation offer in terms of quality and total capacity, and the location and accessibility of Hastings by road. • The De La Warr Pavilion is frustrated in its desire to develop conference business due to the lack of a suitable hotel in Bexhill. The potential conference business that its management has identified is not significant however. • The leisure break market is strong across 1066 Country apart from in Bexhill. It is particularly strong in Rye. Good quality hotels and guesthouses and those that have upgraded and/or are using Internet marketing effectively have seen a growth in leisure break business. This market appears to be declining for the lower standard guesthouses in Hastings however. Hotel Solutions v i April 2007 Hastings, Bexhill and 1066 Country Hotel & Guest Accommodation Futures • The contractors market is strong in Hastings for budget and 2 star hotels and guesthouses. The Travelodge appears to have taken much of this business from the guesthouses in Hastings through the very low rates that Travelodge is offering currently. Occupancies have dropped sharply for the lower grade guesthouses located away from the seafront. A number of these are currently looking to exit the market. • Coach holidays are a key market for the two largest hotels in Hastings. This is very low-rated business that at least one of the hotels is seeking to reduce as it focuses on attracting higher paying markets. • The visiting friends and relatives market is the main driver of business for hotels and guesthouses in Bexhill. Other markets for accommodation here are limited and appear to be declining. A number of guesthouses in the resort are in the process of exiting the market currently. Future Market Prospects • Our research suggests the following future prospects for the hotel and guest accommodation market in Hastings, Bexhill and 1066 Country: o Some, albeit relatively slow, growth in corporate demand as new companies and organisations are attracted to the planned office developments and the area’s economy is regenerated. o Growth in demand from the contractors market for budget-priced hotel and guest accommodation given the number of major construction projects that are planned in Hastings. o Some (although limited) potential possibly to attract association meetings to the newly renovated Marina Pavilion in St Leonard’s and the White Rock Theatre in Hastings. o Potential for country house hotels and good quality 3 star hotels to attract residential conferences from the London area. This is unlikely to become a significant market for hotels in 1066 Country however. Hotel Solutions v ii April 2007