MEDWAY HOTEL MARKET FACT FILE
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1 MEDWAY HOTEL MARKET FACT FILE
2 INTRODUCTION As part of the Thames Gateway Growth Area, Medway is set to be transformed into a thriving riverside city. Medway s 20 year regeneration programme has attracted 150 million of government funding, will lever in over 6 billion of private sector investment, and deliver 16,000 new homes and 20,000 new jobs, with Medway s population increasing by 50,000 over this period. The waterfront is the focus of Medway s regeneration activity, with over 900 ha of brownfield land and 11 kilometres of river frontage. Key sites include Rochester Riverside (2,000 homes, 800 jobs), Chatham Maritime (2000 homes, 250 jobs), Chatham Waterfront and Centre (1,500 homes, 3000 jobs, 250,000 sq m retail), Gillingham Waterfront and Victory Pier (800 homes and 200 jobs), Temple Waterfront (620 homes, 250 jobs, 12,300 sq m retail/employment), and Strood Riverside and Centre (900 homes and 200 jobs). The development of Medway s university and college sector is resulting in further growth, with a new 25 million campus at Chatham Maritime, and a new 75 million Mid- Kent College campus at Gillingham, and student numbers forecast to increase from 10,000 to 15,000 by Further development of the tourism offer in Medway, with the opening in July 2010 of the No. 1 Smithery museum and art gallery at Chatham Historic Dockyard, the potential for World Heritage Site status for the Dockyard and its defences and a new cultural quarter for Chatham Waterfront, will generate additional visitor numbers and raise the area s profile. Medway also has the potential to benefit from the London 2012 Olympic and Paralympic Games, given its accessibility to Stratford via Ebbsfleet and the number of teams that may base their pre-games training camps at some of Medway s sports facilities. All of these developments are likely to generate a significant increase in demand for hotel accommodation in the Medway area from the corporate market, contractors, international and domestic leisure markets, and people visiting friends and relatives, attending weddings, family parties and events. This growth could eventually create a number of opportunities for further hotel development in Medway. Medway Hotel Market Fact File 1
3 INTRODUCTION The Medway Hotel Market Fact File has been compiled to assist hotel companies, developers and investors in assessing hotel investment opportunities in Medway. It provides the latest available information on: The current hotel supply in Medway; Recent hotel development; Current hotel development proposals; Recent hotel performance; The key markets for hotel accommodation in Medway; The prospects for growth in demand for hotel accommodation and what will drive this. All of the data included in the Fact File is drawn from the Kent Hotel Futures Study undertaken by consultants Hotel Solutions in late 2010/early For further information and contacts or to discuss your requirements contact: Ed Woollard Tourism Manager Medway Council Civic Headquarters Gun Wharf Dock Road Chatham Kent ME4 4TR Tel: Ruth Wood Research & Development Manager Kent County Council Invicta House 2 nd Floor County Hall Maidstone Kent ME14 1XX t e. ruth.wood@kent.gov.uk Medway Hotel Market Fact File 2
4 MEDWAY HOTEL SUPPLY Current Hotel Supply There are currently 12 hotels in Medway with a total of 800 letting bedrooms. The Medway hotel supply is predominantly a mix of 3 star and budget hotels, together with one 4 star hotel, a Ramada Encore upper-tier budget hotel, two small 2 star hotels and two small non-inspected hotels. MEDWAY HOTEL SUPPLY MARCH 2011 Standard Hotels Rooms % of Rooms 5 star Boutique star star star Upper-tier Budget Budget Non-inspected Serviced Apartments Total Hotels Notes: 1. Brands including Holiday Inn Express, Ramada Encore and Hampton by Hilton The Medway hotel supply is split between Chatham, Rochester and Gillingham. Chatham accounts for almost half of Medway s total hotel supply and is the location of the 4 star Bridgewood Manor, Holiday Inn Rochester-Chatham and Ramada Encore upper-tier budget hotel at Chatham Historic Dockyard. Gillingham has the next largest number of hotel bedrooms. The hotel supply here is predominantly budget hotels. Gillingham also has one 3 star hotel although this trades at budget hotel room rates. Of the three main Medway towns, Rochester has the lowest number of hotel bedrooms. The only significant hotel here is the Premier Inn Rochester at the Medway Valley Leisure Park in Strood. There are no hotels of any note in the centre of Rochester. Medway Hotel Market Fact File 3
5 MEDWAY HOTEL SUPPLY MEDWAY HOTEL SUPPLY MARCH 2011 Location 4 Star 3 Star 2 Star Upper-Tier Budget Budget Non- Inspected TOTAL Hotels Rooms Hotels Rooms Hotels Rooms Hotels Rooms Hotels Rooms Hotels Rooms Hotels Rooms Chatham Rochester Gillingham Total Medway Medway Hotel Market Fact File 3
6 MEDWAY HOTEL SUPPLY MEDWAY HOTELS MARCH 2011 Establishment Grade Rooms Chatham Bridgewood Manor 4 star 100 Holiday Inn Rochester-Chatham 3 star 149 St George 2 star 45 Ramada Encore Upper-tier Budget 90 Ship & Trades n/a 11 Rochester Gordon House, Rochester 2 star 14 Premier Inn Rochester, Medway Valley Leisure Park Budget 121 The King s Head n/a 12 Gillingham King Charles 3 star 98 Premier Inn Gillingham Business Park Budget 76 Premier Inn Gillingham-Rainham, Rainham Budget 26 Travelodge Medway M2, Rainham Budget 58 Changes in Supply Three new hotels have opened in Medway in the last three years, two of them in the final quarter of MEDWAY - NEW HOTELS Hotel Location Standard No. Rooms Year Opened Ramada Encore Chatham Chatham Historic Upper-tier Dockyard Budget Premier Inn Rochester Medway Valley Leisure Park Budget (October) Premier Inn Gillingham- Rainham Rainham Budget (November) There have been no extensions to any of Medway s existing hotels over the last three years. The Bridgewood Manor and Holiday Inn have undergone refurbishment programmes over the last 5 years. The following hotels have recently closed in Medway: o Medway Manor (2 star, 42 bedrooms); o Royal Victoria & Bull, Rochester (27 bedrooms, not inspected). Medway Hotel Market Fact File 4
7 MEDWAY HOTEL SUPPLY Proposed Hotel Development There are plans for a 120-bedroom budget hotel as part of Berkeley Homes Victory Pier mixed-use development scheme on Gillingham Waterfront. It is unclear however whether this hotel is proceeding due to financial problems for the prospective developer. A site on Corporation Street in Rochester town centre has planning permission for a 110-bedroom budget hotel at the back of the Visitor Information Centre. There is currently no hotel operator or developer interest for this site. Outline planning permission has been granted for an 80-bedroom budget hotel as part of the Chatham Waterfront mixed-use scheme on the Holborn Wharf site in the centre of Chatham, alongside offices, residential apartments and commercial units including shops, bars and restaurants. Medway Hotel Market Fact File 5
8 MEDWAY HOTEL PERFORMANCE & MARKETS Summary The 3/4 star hotel market in Medway is relatively weak at present. While hotels at this level achieve reasonably strong levels of occupancy, achieved room rates are low by national standards and there is little evidence of hotels turning business away. Corporate demand in Medway is not particularly strong and is highly competitive, keeping corporate rates down as a result. Leisure demand is primarily low-rated. In contrast the Medway budget hotel market has been very strong over the last 3 years. Most budget and upper-tier budget hotels have been achieving very high occupancies and have been consistently turning business away both during the week and at weekends, to a significant extent in one case. Budget hotel occupancies have however dropped sharply since the opening of the new Premier Inns at Medway Valley Leisure Park and Rainham at the end of 2010 and budget hotels are no longer denying business at present. Occupancy and Achieved Room Rates Average annual room occupancies and achieved room rates for hotels in Medway are estimated as follows for 2008, 2009 and Standard of Hotel MEDWAY HOTEL PERFORMANCE Average Annual Room Occupancy % Average Annual Achieved Room Rate UK Provincial UK 3/4 Star Chain Hotels Medway Hotels Source: Kent Hotel Futures, Hotel Solutions Notes 1. Source: TRI Hotstats UK Chain Hotels Market Review 2. Sample: Bridgewood Manor, Holiday Inn Rochester-Chatham, Ramada Encore Chatham, Premier Inn Gillingham Business Park, King Charles 3. Net of VAT and breakfast Medway Hotel Market Fact File 6
9 MEDWAY HOTEL PERFORMANCE & MARKETS Average annual room occupancies have been fairly strong for Medway hotels over the last three years, above the national averages for 3/4 star chain hotels. Budget hotel occupancies have been particularly high. Achieved room rates for Medway hotels are low by national standards. There is very little difference in achieved room rate performance between hotels of different standards. The 3 and 4 star hotels in Medway do not achieve significantly higher average room rates than the area s budget hotels and one 3 star hotel trades at average room rates that are substantially below those achieved by some of the budget hotels in Medway. Medway hotel occupancies dipped in 2009 as a result of the recession and the consequent drop in corporate and training course business but largely recovered in 2010 on the back of strong corporate demand related to project work. Hotel occupancies in Medway have reduced significantly since the end of 2010 and so far in 2011 as a result of the opening of the new Premier Inns at Rochester and Rainham. Achieved room rates for Medway hotels reduced in 2009 and 2010 as a result of the recession. Midweek/Weekend Occupancies Estimated weekday and weekend occupancy for Medway hotels in 2010 are summarised in the table below. MEDWAY HOTELS - WEEKDAY/ WEEKEND OCCUPANCIES 2010 Typical Room Occupancy % Mon-Thurs Friday Saturday Sunday Source: Kent Hotel Futures, Hotel Solutions Medway Hotel Market Fact File 7
10 MEDWAY HOTEL PERFORMANCE & MARKETS Midweek occupancies were strong for Medway hotels in 2010, particularly at the budget level. Tuesday and Wednesday nights were the strongest, with budget hotels frequently filling and turning business away on these nights during 2010, to a significant extent in one case. 3/4 star hotels only occasionally filled and turned away business on Tuesday and Wednesday nights. Monday and especially Thursday nights were generally weaker particularly at the 3/4 star level. Midweek occupancies are fairly steady throughout the year. Some hotels report lower midweek occupancies between December and March. Saturday occupancies are generally strong for most Medway hotels throughout the year. Friday and especially Sunday night occupancies are much lower. Weekend demand is stronger between April and September and can be very low during the winter months. Midweek Markets and Trends Corporate demand from Medway companies is the main source of midweek demand for 3/4 star and upper-tier budget hotels in Medway. Two 3/4 star hotels attract a small amount of residential conference and training course business, primarily small events for around delegates, typically involving a two night stay. Contractors are a significant midweek market for one 3/4 star hotel and a secondary midweek market for another. All Medway 3/4 star hotels take some midweek group tour business during the summer months. One hotel also attracts some midweek leisure break business in the summer. Budget hotels in Medway attract a mix of corporate and contractor demand during the week. They also attract some midweek business from people visiting friends and relatives, attending funerals or visiting people in hospital. While Medway hotels attract much of their corporate business from companies in their immediate vicinity, most hotels also attract business from companies in other parts of Medway. Corporate demand is often project-related and unpredictable therefore. The Medway corporate market is highly competitive, which keeps corporate rates at a relatively low level. Medway Hotel Market Fact File 8
11 MEDWAY HOTEL PERFORMANCE & MARKETS The Isle of Grain power station generates significant contractor demand for budget and low-priced hotel accommodation in Medway. In terms of trends in midweek demand: o o Corporate demand reduced sharply in 2009 as a result of the recession in terms of volume and rate, length of stay and Sunday arrivals. Most hotels have seen some recovery in corporate demand in 2010 and one reported strong growth in corporate business. Residential conference and training course business has reduced significantly in 2009 and 2010 as a result of the recession. Weekend Markets and Trends Medway 3/4 star hotels attract a mix of weekend business from group tours, weekend breaks, weddings and functions and people visiting friends and relatives. Local events also generate a small amount of business for some hotels. Weekend break business is largely rate driven through special offer promotions by the hotel chains represented in Medway. Medway does not appear to be seen as a leisure break destination despite it having a strong visitor offer in terms of Chatham Historic Dockyard, Dicken s World and Rochester Castle and Cathedral. The area primarily attracts day visitors. Group tours are from the UK and Europe, most typically involving a two-night stay in Medway as part of a wider tour. Group tour rates are generally around per person dinner, bed and breakfast. Budget and upper-tier budget hotels primarily attract weekend demand from people attending weddings and other family parties and visiting friends and relatives. Some budget and low-priced hotels also attract weekend demand from contractors and small amounts of business related to local events. Medway Hotel Market Fact File 9
12 MEDWAY HOTEL PERFORMANCE & MARKETS Events that generate some demand for hotels in Medway include: o Rochester Dickens Festival o Rochester Dickensian Christmas Festival o Rochester Sweeps Festival o Events at Chatham Historic Dockyard o Sports events at Medway Park o Major conferences and conventions at Priestfield Stadium Weekend markets have generally held up over the last 3 years. One hotel reported an increase in weddings business. Another reported a reduction in weekend lengths of stay, with more people opting for only a Saturday night stay and reduced demand for Friday nights. Denied Business 1 3/4 star hotels in Medway rarely deny business either during the week or at weekends. Most Medway budget hotels were regularly turning away significant business for most of 2010 from Monday to Thursday, on Saturday nights and on Friday nights between July and September. They have ceased to do so however since the opening of the new Premier Inns at Medway Valley Leisure Park and Rainham at the end of Business that hotels turn away because they are fully booked Medway Hotel Market Fact File 10
13 MEDWAY HOTEL PERFORMANCE & MARKETS Prospects for 2011 Most Medway hotel managers expect to see a significant drop in occupancy and rate in 2011 as a result of the opening of the new Premier Inns. A number of hotels have reduced their room rates to enable them to compete with these new hotels. There are some signs of recovery in the training course market. Two hotels plan to target the group tour market in 2011 to boost their occupancy levels. This is a lower-rated market that is thus likely to contribute to a drop in achieved room rates for these hotels. Medway Hotel Market Fact File 11
14 PROSPECTS FOR GROWTH Strategic Context Medway is part of the Thames Gateway Growth Area, the largest regeneration project in Europe, and one of 4 Growth Areas identified by Government to deliver significant levels of new housing and jobs in and around the South East. Medway s 20 year regeneration programme has attracted over 150 million of government investment, which is to unlock over 6 billion of private sector investment over the next 10 years. The programme is targeted to create 16,000 new homes and more than 20,000 new jobs, transforming Medway into a thriving riverside city. Medway s population is forecast to expand from the 2009 level of 254,000 to 300,000 by Medway Council is making a bid for city status for Medway under the competition to designate a new UK city to mark the Queen s Diamond Jubilee in This could significantly help to market Medway to investors, both nationally and internationally. Medway Waterfront is the focus for Medway s regeneration activity, with over 900 hectares of brownfield land across 14 sites, spanning 11 kilometres of the River Medway Medway Hotel Market Fact File 12
15 PROSPECTS FOR GROWTH Medway Key Regeneration & Development Schemes Medway Hotel Market Fact File 13
16 PROSPECTS FOR GROWTH Key projects that will help deliver the Medway vision and associated targets include: o Rochester Riverside The flagship Rochester Riverside scheme is a 30 hectare site with a range of proposed uses including housing, offices, hotels, a school, local leisure/shopping, cafes and bars. It is targeted to deliver 2,000 new homes by 2022 and 800 new jobs. o Chatham Maritime, Waterfront and Centre A 1 billion regeneration programme is underway to transform Chatham as the new city centre of Medway. The area around the railway station will become a new business quarter. Proposals include the 160m refurbishment and expansion of the existing Pentagon Shopping Centre, a new bus station, and remodelling of the road system, on which work has started. 1,500 new dwellings and 3,000 new jobs plus 250,000 sq m retail will be delivered here. Chatham Maritime & St Mary s Island is the most advanced of the waterfront sites in Medway, with much of the residential development, a hotel, the Dockside Outlet Village, the Dickens World attraction and the University Campus in place. Some land is still available. On completion it is targeted to deliver 2,000 homes and 250 new jobs. Chatham Port is the Commercial Dock, where potential has been identified for a mixed use development and 600 homes. o Gillingham Waterfront Gillingham Waterfront extends to 32 hectares, with proposals for 800 homes being developed alongside marine activity and the potential to create 200 jobs. This site includes Berkeley Homes Victory Pier development (under construction), which will also deliver bars, restaurants, a hotel and student accommodation Medway Hotel Market Fact File 14
17 PROSPECTS FOR GROWTH o Temple Waterfront Proposals for the 28 ha Temple Waterfront site include a 100m scheme to deliver 620 homes and 12,300 sq m of retail and employment space creating 250 jobs. Outline planning has been granted. La Farge are leading the project. o Strood Centre and Waterfront Strood Centre new homes and 200 new jobs are proposed here plus major infrastructure works to relieve congestion and improve public realm. Strood Civic Centre this is a future regeneration site overlooking the river for which a development plan is to be prepared. Strood Riverside - a masterplan is now in place for this 10ha site. 550 homes are planned here alongside small retail, business and food and drink uses. o Developing Medway s University & Higher Education Sector Medway has 3 Universities focused on the new 25 million Medway Campus at Chatham Maritime - the University of Kent, the University of Greenwich, and Canterbury Christ Church University, as well as the University College of Creative Arts at Rochester. In addition, the area has Mid-Kent College, which has recently relocated to a new 75 million campus in Gillingham. There are 10,000 students currently, to increase to 15,000 by Medway Hotel Market Fact File 15
18 PROSPECTS FOR GROWTH o Developing the Medway Tourism Offer Medway Council s Tourism Strategy seeks to continue the development of Rochester s heritage product, but also to develop Medway s cultural offer and the evening economy beyond Rochester. The opening of the Dickens World attraction has boosted visitor numbers to Chatham (180,000 visitors) and the Dockside Outlet Village has created another destination to complement this and the Historic Dockyard offer. The 13 million No.1 Smithery: National Treasures Inspiring Culture opened in July 2010 as a brand new interactive museum and gallery showcasing unique and previously unseen maritime artefacts and national and international touring art. Future projects with the potential to expand Medway s tourism offer and further raise its profile with visitors include: - The bid for World Heritage Site status for Chatham Historic Dockyard and its surrounding fortifications; - The development of a new cultural quarter as part of Chatham Waterfront, including a waterfront theatre. o Medway Park The 11.1 million Medway Park centre of sporting excellence opened at Gillingham in April The centre secured a number of major sporting events in 2010 including the Modern Pentathlon World Cup, the National Tetrathlon Championships, the Kent International Judo Championships and the ETTA Butterfly Grand Prix table tennis tournament. It is hosting the Modern Pentathlon European Championships in 2011 and will host the British Transplant Games in Medway Hotel Market Fact File 16
19 PROSPECTS FOR GROWTH o London 2012 Olympics & Paralympics Pre-Games Training Camps Medway has 5 sports venues that have been accredited pre-games training camps: - Medway Park has been accredited for Olympic Pre Games Training Camps for athletics, badminton, basketball, boxing, fencing, gymnastics, artistic gymnastics, rhythmic, Gymnastics, trampoline, modern pentathlon, taekwondo, volleyball, wrestling. It is also accredited as a Pre Games Training Camp for a number of Paralympic sports. - Gillingham Football Club for archery and football. - Howard Table Tennis Centre for table tennis. - Jumpers Rebound Centre for gymnastics and trampoline. - Castlemaine Badminton Centre for badminton. o The Isle of Grain Power Station EON is currently developing a new gas fired power station on the Isle of Grain at a cost of 500 million, to replace the existing oil fired power station when it comes to the end of its life in The development is forecast to create 1000 construction jobs. o Lodge Hill, Chattenden A new community is to be developed at Lodge Hill, north of the River Medway, with the potential to deliver 4,500-5,000 new homes alongside commercial, retail and community provision. This is an ex-military site to be developed in partnership with Land Securities over a 20 year period. Medway Hotel Market Fact File 17
20 PROSPECTS FOR GROWTH Future Prospects by Market Contractor demand for budget and low-priced hotel accommodation is set to increase significantly in Medway over the next 5-10 years given the levels of construction work that will be taking place as the major regeneration schemes are progressed. There should eventually be strong growth in corporate demand for hotel accommodation in Medway given the planned office development and employment growth, depending on the companies and industry sectors that are attracted to the area. Medway s 3/4 star hotels could see some growth in demand for residential conferences as the area develops and new companies and industries are attracted. The residential conference market has however generally been declining across the UK for a number of years, as companies have cut back on meeting and training budgets, developed their own meeting and training facilities and made greater use of video, internet and telephone conferencing. Growth in this market is thus likely to be relatively slow and residential conferences are likely to remain a minor secondary midweek market for most hotels. The expansion of the universities in Medway could generate increased demand for hotel accommodation during graduation weeks, from parents visiting students, from visiting academics, lecturers and examiners and in relation to conferences held at the universities. Demand from people attending weddings, funerals, family parties and other functions and from people visiting friends and relatives should increase steadily, given the projected growth in Medway s population. There could be scope for Medway hotels to develop leisure break business given the existing and developing visitor offer in Chatham and Rochester. The challenge will be to raise awareness of Medway as a leisure break destination. Medway Hotel Market Fact File 18
21 PROSPECTS FOR GROWTH Medway hotels should also be able to develop group tour business on the back of the Chatham and Rochester visitor offer and Medway s accessibility to other parts of Kent and London. While this may be lower-rated business hotels can use this market to boost off-peak periods and to give them base business to assist them in yielding room rates. Sports events at Medway Park could generate new demand for hotel accommodation in Medway. The centre has already been successful in attracting a number of international sporting championships and tournaments in 2010 and Demand for budget and low-priced hotel accommodation from people wanting to stay over after a night out could increase in Chatham town centre as its evening economy develops and the area s population increases. There is likely to be significant demand for hotel accommodation in Medway from spectators attending the London 2012 Olympic and Paralympic Games in the summer of The evidence from previous Games is that spectators will stay up to 2 hours away from the Olympic Park. Many of the hotels close to the Olympic Park and in Central London have already been booked up for officials, sponsors and press and media teams. There will be a drive to encourage London 2012 spectators to use public transport. With journey times of 19 minutes to the Olympic Stadium from Ebbsfleet and strong links by motorway to Dover, Gatwick and Stansted, Medway is well placed to act as a base for Olympic and Paralympic spectators. Olympic and Paralympic teams using the accredited Olympic Pre Games Training Camps in Medway may also require hotel accommodation in the run up to the Games. Medway Hotel Market Fact File 19
22 SOURCES OF FURTHER INFORMATION For further information and contacts or to discuss your requirements contact: Ed Woollard Tourism Manager Medway Council Civic Headquarters Gun Wharf Dock Road Chatham Kent ME4 4TR Tel: Ruth Wood Research & Development Manager Kent County Council Invicta House 2 nd Floor County Hall Maidstone Kent ME14 1XX t e. ruth.wood@kent.gov.uk The following websites provide further information on the plans and strategies for Medway: Medway Renaissance Chatham Maritime Victory Pier, Gillingham Lodge Hill Medway Hotel Market Fact File 20
23 SOURCES OF FURTHER INFORMATION Visit Kent Business The latest facts and figures on tourism in Medway and Kent are available from Visit Kent s Visit Kent Business website through the following links: Medway Hotel Market Fact File 21
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