Monday, 19 December 2011

Hotel development booms prior to Olympics

The economic situation is showing no signs of dampening the opening of new hotels prior to the 2012 Olympic Games.

Budget hotel chain Travelodge has announced that it is to open a further 146 locations of which 65 will be based in the capital. Travelodge have managed to open 38 new hotels in 2011 and in prime real estate locations such as Liverpool Street, Covent Garden and Old Street. The chain have also developed in areas of natural beauty such as the Lake District and in their usual out of town destinations such as Ruislip.

The vast expansion has been put down to the chains ability to raise credit quickly compared with its rivals and to snap up lucrative sites to put it ahead of its competitors. Guy Parsons, the group CEO said "This, coupled with our ability to be flexible and innovative in terms of the development schemes we can undertake, ensures we are in a very strong position. The expansion of our target list reflects the confidence I have in the ability of our property team to move quickly and secure the best sites,”

The expansion of Travelodge represents an interesting issue going into 2012 and beyond. The first is if Travelodge will be able to maintain high occupancy rates after the Olympics. If they are unable to do this it could create problems in terms of paying back credit which has been easy to obtain. The group could also be affected adversely by fluctuations in the property market if they are to acquire sites at the wrong time. Despite the issues mentioned, the largest effect could be felt by independent hoteliers who are driven out of the market by the low price and convenience of Travelodge properties. We are constantly being told about the homogenisation of Britain's high streets and Travelodge will not slow down as an act of sympathy for the small business owners.

Time will tell if their business will continue to flourish or if there will be a steady backlash from British citizens and tourists who become tired of the same old hotel stays.