Z Hotels to open Leicester Square site with £23m loan

Buget brand Z Hotels has secured a £23m loan to open a new property on the doorstep of London’s Leicester Square.

The ‘compact luxury’ brand, which runs 14 hotels across the UK, will redevelop a five-storey vacant office building on Charing Cross Road into a hotel.

Plans are subject to approval but are expected to include a minimum of 81 rooms and a maximum of 95.

It will be the 15th UK opening for Z Hotels, which was founded by Bev King in 2011 and now offers over 1,700 rooms in London, Liverpool, Bath, and Glasgow.

The development will be funded by a £23m co-loan from OakNorth bank and property lenders ASK Partners.

King said: “Our guests predominantly want to spend a couple of nights in a city centre location either for business or pleasure, to explore the city, and to sleep in generously designed surroundings.

“This new site situated on Leicester Square’s doorstep embodies this demand perfectly, providing our residents with compact but well-designed bedrooms at affordable prices.”

OakNorth first provided funding to Z Hotels in 2018 to support the opening of its compact hotels in London's Covent Garden, Holborn and Tottenham Court Road.

The hotel group secured a further £15m loan earlier this year to add 20 rooms to its 112-room Piccadilly site.

Deepesh Thakrar, senior director of debt finance at OakNorth, said: “Given London’s hotel market is set to show strong resilience against the current downturn, we fully expect this new hotel to be another success story for Z Hotels.”