In 2012 I returned to my home city of Leeds, having owned and operated a hotel, restaurant and outside catering company for 11 years overseas. When I left Leeds in January 2001, I left a city on the cusp of an economic boom. Its hotel and hospitality industry was expanding to meet the rise in demand, and the future for Leeds looked nothing but positive. I returned to Leeds in late 2012 to a very different picture.
According to the Office of National Statistics, a total of 6,455 hotels and hospitality companies went out of business in 2012 across the UK. Leeds saw more than its fair share of hotels and hospitality businesses either closed or in the hands of banks and insolvency practitioners.
It is refreshing to see that the Leeds hotel and hospitality industry, less than two years on, has turned a corner. In the 12 months to April 2014, average occupancy in Leeds Hotels has risen to 75.4% - an increase year on year of 2.3%. Average room rates for Leeds hotels now sits at £67.69 - a 6.43% increase year on year.
Revenue per available room is now £51.05 - a 9.84% increase year on year. One of the most important indicators, in my opinion, is gross operating profit per available room (goppar), and Leeds hotels have increased this by 8.86% to £27.70. This is still low but heading in the right direction, and it shows astute management within the Leeds hotel industry.
However, there will be owners and operators who read these statistics and feel they are still not good enough, and I would wholeheartedly agree. But there is positive news in the opening of a brand new five-star hotel in 2015 next to the Leeds arena. This shows confidence in the future of the Leeds hotel and hospitality industry and the future of Leeds as a whole.
Mark Galins, managing director,
Hotel & Hospitality Consultants Ltd
LEEDS SUPPLY, PIPELINE AND TRANSACTIONS
Leeds is the third largest city in the UK. Historically, it was a major centre for the production and trading of wool and textiles.
As the city expanded rapidly in the 18th and 19th centuries, engineering and chemical industries became increasingly significant economic drivers. The city retains a solid manufacturing base, but has continued to evolve commercially and is now arguably more widely recognised for its services sector.
In recent years, Leeds has seen an increasing emphasis on leisure and retail, with the Trinity Leeds shopping centre and 13,500 capacity First Direct Arena both opening in 2013. The city has long since attracted overseas visitors through international matches in cricket and rugby league, and this exposure will shortly be augmented by the prestigious honour on 5-6 July of hosting the Grand Depart of the Tour de France.
The hotel market in Leeds comprises just over 6,000 rooms, of which 74% operate under major global, international or national brands.
In stark contrast with all other major UK city hotel markets, Leeds has seen hardly any new hotel supply in the past few years, and the 2012 opening of the 131-bed Premier Inn Leeds Arena has been the only major new addition over the past five years. In part, this reflects an overhang of significant new supply growth in the build-up to the recession in 2008, since when several unsuccessful residential developments also temporarily fuelled a number of transient and off-radar serviced apartments that disappeared as the property markets improved.
Interest from investors and developers is showing signs of returning, with GB Group set to open a 206-bed Hilton next year, which will be the first five-star hotel in the city. Evans Property Group has also recently gained planning consent for a four-star, 90-bed Dakota hotel in the heart of the City's business district, scheduled to open in 2016.
The most recent major hotel transactions in Leeds were around a year ago when the 130-bed Holiday Inn Express changed hands, and the 147-bed Radisson Blu was sold as part of a mixed-use investment deal.
Alan Gordon, director, AM:PM
A KNOWLEDGE-BASED ECONOMY
In a trend mirrored by many of the UK's large provincial centres, in the last 10-20 years Leeds has reduced its reliance on heavy industry and expanded its business services sector to become a largely knowledge-based economy.
It has become the most important commercial and financial centre in Yorkshire and has gained the reputation of being one of, if not the largest and most important, UK legal and financial centre outside London, with 13,000 people employed in the banking and financial services sector.
The city is an important hub for professional services, with more than 30 national and international banks, 150 law firms and 200 accounting practices.
In terms of tourism, Leeds is an important centre for music and theatre. The city is home to the Grand Theatre, where Opera North is based, the West Yorkshire Playhouse and City Varieties.
Leeds Carnival is the UK's second largest West Indian Carnival, attracting 100,000 people annually over three days, and the Leeds Festival, held annually in Bramham Park, is one of the UK's largest rock festivals, attracting 80,000 visitors.
Leeds is also home to the Royal Armouries, the UK's national museum of arms and armouries, which is a popular venue for large corporate and university events and offers a banqueting suite for over 1,000 people.
The most recent leisure attraction in the city is the £60m, 13,500-capacity Leeds Arena, which held its first concert with Bruce Springsteen in July 2013 and was officially opened subsequently in September 2013 with Elton John playing to an audience of 12,000 people.
The Leeds room occupancy levels have shown strong growth in 2013 compared to the lowest point in the Leeds market in 2009, when occupancy fell to 63.6%.
The ARR in 2013 is 4.5% above the previous year at £56.02 and 7.25% ahead of the lowest rate, recorded in 2011 at £52.23.
Market revpar has increased ahead of inflation since the lows of 2010 with the greatest increase in 2013 - some 10.85% ahead of the previous year.
This is a very strong performance for a regional city and reflects the upturn in economic activity and increasing corporate activity.
As well as this, large-scale developments, including the Trinity Leeds Shopping Centre and Leeds Arena, have put Leeds back in the upper tier for retail and leisure attractions.
Harry Hawksby, national director, Hotels & Hospitality Group, JLL
The last year has been an exciting time for Leeds, demonstrated by a period of growth, which is a trend we expect to continue. We will welcome the Tour de France this month, which will showcase the city to 3.5 billion people in 188 countries. We are hosting the Rugby World Cup in 2015 and Hammerson's luxury shopping centre, Victoria Gate, will open in 2016.
Jennifer Young, associate director of visitor economy, Leeds and Partners