Regional property focus: Manchester
Manchester's buzz is back
Manchester's economic output is forecast to grow faster than the UK average in the next decade as the city continues to successfully rebuild its fortunes. The city is the UK's second most popular centre for direct foreign investment after London, and the population has increased by a fifth in the past 10 years.
The devolution package handed to Greater Manchester Combined Authority last year gives unprecedented control over public spending and will help Manchester become the fulcrum of the 'northern powerhouse' the chancellor wants to create to balance the UK economy.
Digital, media and financial services industries are the biggest contributors to Manchester's economic growth, and a strategy to specialise and diversify the city's business base through life sciences and advanced materials is another positive example of the city's resurgence. Its hotel industry is also powering ahead in terms of new hotel openings.
Manchester's hotel revenue per available room (revpar) grew by over 9% in the 12 months to January 2015 and gross operating profit per available room (goppar) grew by almost 14%, according to HotStats Hospitality Intelligence. Despite new supply openings, demand remains strong with occupancies already high at 80%, a 1.5% uplift in the 12 months to January this year. The average room rate (ARR) averaged almost £82 over the same period - over £5 ahead of the same period to January 2014. ARR growth has been robust and rates averaged over £90 in November 2014.
The city continues to generate demand from leisure visitors from its thriving music, retail and culture scene, as well as corporate entertaining from its football teams - and in the autumn the Rugby World Cup arrives. A strong recovery in business travel is demonstrated by ever-increasing footfall at Manchester Airport and, with the Airport City plans fast-advancing, the city will be more accessible and attractive to international travellers.
Manchester is second in the top 10 UK cities for the most active room pipelines, with nearly 2,000 rooms due to be built over the next three years. New openings this spring include Melia's 208-room Innside hotel and Motel One. The luxury Hotel Gotham has just opened, while other launches include a second hotel from former Manchester United stars Gary Neville and Ryan Giggs, who plan to transform the former Northern Stock Exchange building into a 35-room boutique hotel to add to Hotel Football.
PwC predicts regional hoteliers overall will be confident to raise rates upwards to drive 5.4% and 5.1% revpar gains in 2015 and 2016. But looking ahead, Manchester's economic growth means it should be able to sustain higher than average regional performance metrics, although high new room openings and a high pipeline could challenge trading.
Liz Hall, head of hospitality and leisure research at PwC
Room for more rooms
An inevitable consequence of the prolonged economic downturn between 2008 and 2013 was a marked reduction in hotel development in Manchester - and an equally inevitable consequence of the return to economic growth is an increasing appetite for funding and branding support as hotel development returns.
Much of the activity is underpinned by global brands such as IHG and Hilton, but the most significant recent independent hotel development in Manchester has been Hotel Football, valued by Colliers International on behalf of the bank supporting Gary Neville and Ryan Giggs.
We've also seen improving demand via transactional activity - the trophy sale of the Lowry hotel to Westmont, and Park Inn that went through on the back of competitive bidding by Ability Group.
Manchester has plenty of bedrooms, but there's room for more with many of the already represented global brands seeking expansion and other emerging brands keen to secure a foothold in the city centre. Manchester is now seen as both a commercial and destination location and consequently it attracts business seven days a week
Julian Troup, head of UK hotels - agency, Colliers
A promising year Last year was a very good one for Greater Manchester's hotel industry, with occupancy levels outstripping previous records. To
see figures continue to rise alongside ever-expanding bedroom stock shows a healthy tourism industry.
There are a number of new hotel operators preparing to enter the market and many of the city's existing hotels are upgrading their facilities. This investment is well-timed, as the tourism calendar is packed with new developments and drivers. There's the reopening of the Whitworth art gallery, the Home arts centre opening in May, and the upcoming Manchester International Festival, Manchester Pride's 25th anniversary, and then the Rugby World Cup.
This is really good news for Greater Manchester and reflects the hard work of many organisations and people in developing and promoting our destination. But we cannot afford to be complacent. We must continue to make best use of our marketing resources to continue to grow the tourism industry in the region, which supports so many jobs.
Nick Brooks-Sykes, director of tourism, Marketing Manchester International
