International real estate advisor Savills has forecast that the Airports Commission’s recommendation for a third runway at Heathrow will see demand for hotel rooms soar by 42%, equating to an additional 3,500 beds.
The firm also reports that 10-year average occupancy rates for airport hotels are around 78-79%, meaning they are particularly attractive to operators despite average daily rates often being lower than their city centre counterparts. Relatively robust operational performance and increasing demand caused by rising passenger numbers at Heathrow (up by 1.4% in 2014 compared to the previous year), even without extra runway capacity, are already attracting new hotel brands and concepts.
Pod hotels entering the scene
While mid-market branded operators such as Hilton and Holiday Inn have historically colonised the market, new pod hotel concepts such as Yotel and budget boutique operators such as Bloc are entering the scene. CitizenM, while not found at UK airports, does have sites in other European airport markets such as Schipol in Amsterdam.
James Bradley, associate director of hotels at Savills, comments: “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, adds: “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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