MARKET OVERVIEW
78
ANNUAL REPORT 2015
FRASERS HOSPITALITY TRUST
Hotel performance indicator growth
has been much more pronounced
in Glasgow than Edinburgh. For YTD
June 2015, Edinburgh RevPAR has
only increased by 3% to GBP60.70
compared to 9% for Glasgow,
although Edinburgh’s RevPAR
is GBP5 (USD7.68) higher than
Glasgow for the same period.
UK’s 2015 GDP forecast is forecast
to grow by a stable 2.5%. Glasgow
occupancy will most likely increase
by 1% for 2015 and up to 1% for
2016. ADR will most likely increase
by approximately 5% for 2015 and 1
to 5% for 2016.
Existing Supply
There are 101 hotels in Glasgow
with approximately 8,242 rooms
according to AM:PM.
The most common types of
accomodation in descending order
are: 4 star (35% of total Glasgow
rooms, 2,916 rooms), followed by
budget (31%, 2,580 rooms), and 3
star (16%, 1,351 rooms), 2 star (6%,
500 rooms), 5 star (4%, 350 rooms),
apartment (4%, 327) and hostel (3%,
218 rooms). There are currently only
two 5-star hotels in the city.
By brand type, global brands are the
most common representing 30% of
Glasgow hotels, 29% are UK hotel
brands, 21% are independent while
10% are regional brands.
Annual hotel supply increase has
followed the rest of the UK with
2011 and 2013 being quiet years
while 2012 and 2014 were high
volume years. Of the last five years,
2012 saw the most new rooms enter
the market with 500 new rooms.
The lowest year was 2013 with only
100 rooms. 2015 will see just above
100 rooms enter the market.
Future Supply
43 hotels with a potential 5,000
rooms may enter the market, of
which 11 projects are on hold and
25 are unconfirmed. The seven
confirmed pipeline hotels have a
total of 1,000 rooms to 2018.
Of all confirmed and speculative
pipeline hotel rooms, the most
common hotel categories in
descending order are: budget (38%,
1,865 rooms), 4 star (31% 1,518
rooms), 3 star (20%, 1,012 rooms),
5 star (5%, 250 rooms), Apartment
(5%, 246 rooms) and 2 star (1%, 65
rooms).
2015 openings include the 120 room
Village Hotel which opened in July,
the 170 room Travel Lodge and
the 101 room Ibis Styles which will
open in late 2015. The conversion
of office blocks to an 88 room
Hampton by Hilton is due to be
completed in 2016.
Hospitality Market Outlook
Glasgow’s prospects of attracting
international and domestic visitors
are positive given its good transport
connectivity. Glasgow is within an
hour’s drive of three international
airports and Glasgow International
Airport is only 15 minutes from the
city centre. It is only an hour’s flight
from London and there are 58 flights
to London a day. Seven million
passengers pass through Glasgow
International Airport annually.
Glasgow has the largest suburban
rail network outside London and it is
the only UK city outside of London
to have an underground network.
March 2015 was the busiest
March in seven years for Glasgow
International Airport, and the 25th
consecutive month of growth, with
a 22.3% increase in international
traffic and 8.2% growth in domestic
traffic. For the year to March 2015,
overall passenger traffic increased
by 6.3% on the same period in 2014.
There are 200 flights a day and 30
airlines serve 100 routes.
13 new routes were introduced this
year, including direct flights to Las
Vegas, Munich, Prague, Budapest,
Lublin and a daily service to
Halifax, Nova Scotia. In June, Flybe
introduced direct flights to Cardiff.
Key development and infrastructure
projects are changing the landscape
of Glasgow, creating potential hotel
demand. GBP500 million (USD768
million) was spent on venues and
supporting infrastructure for the
Commonwealth Games from which
the city continues to benefit.
The Pacific Quay Digital Media
Quarter will have BBC Scotland as
the anchor tenant and will support
the growth of digital and new
media industries. The International
Financial Services District (IFSD) is a
billion pound public-private project
creating a city centre location for
financial and business services.
Glasgow Harbour will receive
GBP1.2 billion (USD1.8 billion)
in the next decade to create “an
urban community of mixed-use
development.” The SECC Precinct
is a major renovation project valued
at over GBP520 million (USD798
million) to upgrade the Scottish
Exhibition and Conference Centre
into a larger exhibition, conference
and entertainment complex.
The City Science/ International
Technology and Renewable Energy
Zone (ITREZ) specialises in science
and technology. The Clyde Gateway
Urban Regeneration Company has
designated more than two thousand
acres as prime regeneration land to
the east of the Glasgow city centre
and will receive GBP140 million
(USD214 million) in public funds
and GBP1.5 billion (USD2.3 billion)
in private development over the
next two decades. These initiatives
will further cement Glasgow’s
position as the commercial heart
of Scotland. Hoteliers can expect
increases in demand from a
wide range of corporate guests,
macroeconomic conditions
allowing.
We can expect this trend of strong
growth across Scotland’s primary
cities to continue over the next two
years, although at a slower pace to
the record year of 2014. Glasgow
has the largest GDP in Scotland
and it is the third largest UK city by
population, its commercial interest
is increasingly complemented by
its interest as a tourism and culture
destination. Although it’s economic
growth rate is not as fast as oil rich
Aberdeen or Edinburgh, its tourism
reputation and hotel performance
have improved drastically. Glasgow
has the capacity to further improve
ADR and occupancy through
destination marketing in the future.
