The Newcastle hotel development market is unusual in that a number of projects have progressed in recent years – particularly in 2011 and 2012 – leaving the pipeline relatively small, according to property consultants GVA.
Other major UK provincial cities such as Glasgow and Manchester have experienced fairly limited growth in supply in recent years, the legacy of which is a substantial number of schemes in the planning pipeline, most of which have stalled at funding.
Andrew Renouf, of GVA, said: “Predicting future supply is therefore easier in Newcastle than in many other cities. However the raft of recent hotel openings has had a significant impact. Overall market performance has declined – revenue per available room in 2012 was 11% lower than in the 2007 peak.”
Demand has been growing; the number of rooms sold to the hotels in the city wide data set increased by 6.2% - healthy growth but simply not enough to offset the increase in supply.
“Average performance at existing hotels is poorer than at the new hotels which are discounting to establish market share and displacing demand from more ‘tired’ properties. It is essential that existing hotels continue to invest in their product to ensure they continue to compete effectivelym” added Renouf.