There has been much debate about whether we now have an oversupply of hotels in Newcastle Gateshead, particularly since Silverlink recently began work on its Stephenson Quarter scheme to include a Crowne Plaza Hotel in the first phase, the leisure anchor in this emerging business district.
This was followed in mid-June by the announcement that the Grey Street Hotel has a new owner in the Malhotra Group, which is planning a multi-million pound refurbishment programme to bring it back to being a top class venue, as well as developing a five-star hotel elsewhere on Grey Street.
Such investment shows a significant level of faith in the market, but it is understandable that some existing operators should feel anxious about the enhanced competition.
From the paying customer’s perspective of course, healthy competition is to be welcomed.
However, operators will need to be a lot more perceptive about how they differentiate their offering and there does appear to have been some recent price 'blurring' within the three- and four-star sectors in the city.
The issue is not about whether we can sustain more beds, I believe, but the number of stars they carry with them.
Sarah Stewart, chief executive of Newcastle Gateshead Initiative (NGI), reports that, far from the market here being depressed, uptake of beds is actually strong.
The latest figures released by STR Global, a national hotel occupancy research agency, indicate that occupancy levels were up 2% on the same time last year with a 72% occupancy level overall – the average is 70% for regions outside of London.
In fact, just after Easter this year, NewcastleGateshead saw a 97% occupancy peak and this type of spike is common when major events are taking place across the region.
For example, six hotels were fully booked over the weekend when the European Athletics Team Championships were held at Gateshead International Stadium.
Premium hotels such as the Crowne Plaza, Indigo and Hilton, bring their own market with them because they are global brands with global promotional budgets.
This means the regional image can travel much further than it would ordinarily. Other operators may lack this level of global recognition so do not benefit from the impact enjoyed by the Hilton when it launched here.
Where the slow-down is more apparent is in the budget sector, where pockets are squeezed most in the recession, and this has perhaps contributed to the apparent stalling of the Travelodge, with its proposed 260 beds in the former Co-op building on Newgate Street.
In my view, what the region needs most are top level hotel brands like the planned Crowne Plaza that might also offer premium exhibition and conference centre facilities to help drive the local economy.
Indeed, if the proposed expansion of exhibition space around Sage Gateshead is given the green light towards the end of this year, it would make a major difference to visitor traffic – and help to boost local hotel trade.
Darron Barker, head of national commercial property consultancy, Lambert Smith Hampton's (LSH) Newcastle office
Quality is king for hotels in region
Deputy business editor Karen Overbury looks at the need for quality hotels in the North East
The first time I looked for a hotel in the North East was in the summer of 1987. My husband and I were moving from the South East and needed somewhere to rest our heads during a weekend’s search for property.
There was only one hotel near Newcastle Airport. The quaysides of Newcastle and Gateshead were forgotten, shabby places and Newcastle city centre appeared to have a dearth of hotels of any type and – in those pre-internet days and with mobile telephones a rarity – it was almost impossible to find even the most basic of accommodation.
A call from a phone box to the tourist information centre gave us the address of a guest house – no en suite, but it served its purpose for a couple of nights.
Things have changed and the supply has improved dramatically. But the demand for quality accommodation has also soared. Newcastle is not just a “party city”, but a centre for conferences and exhibitions. The region’s tourist industry has grown, bringing more visitors. Sporting and other events bring a constant flow of visitors.
But expectations of business travellers and tourists have also risen. Quality is king and attention to detail plus leisure and luxury are vital for the established and the new.