City Review : LeedsCompiled by Christie + Co
November 2007
The city of Leeds is the regional capital of Yorkshire & Humberside, with a population of over seven hundred thousand. Leeds owes much of its historical prosperity to its strong manufacturing heritage, but has now become a significant commercial hub, as well as one of the largest retail centres in the UK. The city is well-established as one of the major centres for law and financial services outside of London. There are a significant number of development projects, either underway or being planned, in and around the city. The most notable regeneration activity is already underway at the Holbeck Urban Village, to the south of the city centre.
The market performance of hotels in Leeds has declined since 2000, when many of the city’s hotels achieved occupancy levels approaching 80%. Since 2002, however, Leeds has experienced a significant increase in hotel supply, with around 1,500 new hotel rooms opening in the city, and the rate of hotel development peaking in 2004. More recently, hotel occupancy performances have stabilised at 70% and the latest figures from The Bench show little variation in occupancy or average room rate (ARR) since 2005.
According to data sourced from The Bench, from a sample including 11 separate hotels comprising 1659 bedrooms, the Leeds hotel market showed an increase of 1.6% in RevPAR in 2006, when compared with 2005. This was the result of minor increases in both average room rate (ARR) and occupancy.
The data for 2007 to date shows a small improvement in performance for 2007 when compared with 2006. RevPAR has increased by 2% for this period, as a result of small improvements in average room rate (ARR) and occupancy.
Since 2006, hotel development has slowed down, with the 130-bedroom Express by Holiday Inn Leeds City Centre-Armouries (August 2006) and the 217-bedroom Etap Hotel (March 2007) being the only major hotel openings. This period has, however, seen the opening of two RoomZZZ Serviced Apartments properties in the city totalling 131 apartments.
When considering the present day, there are a large number of hotel developments underway or proposed in Leeds, including a 330-bedroom City Inn which is under construction at the Granary Wharf development and expected to open in late 2008. On the southern outskirts of the city, a 109-bedroom De Vere Village Hotel & Leisure Club is being built at Capitol Park West and is due to open in Spring 2008. In June 2007, Hilton announced that it would be entering into a preferred development agreement with Shiva Hotels, with two sites in Leeds expected to form part of the agreement. Unconfirmed reports suggest that these will be a 120-bedroom Hampton by Hilton at the Quarry Hill site and a 200-bedroom full-service, core brand Hilton. Later this year, work is expected to start on another 38-apartment RoomZZZ Aparthotel at Swinegate, with the property expected to open late in 2008, and on a site in Portland Crescent, in the city centre, where planning permission has been granted for a 178-bedroom, branded, mid-market hotel. Additionally, a number of the mixed-use schemes planned for the city centre incorporate a hotel element including: The Round Foundry (phase one already complete), Eastgate Quarters and the Leeds Metropolitan University Civic Quarter
Site.
It is likely that the next couple of years will continue to be challenging for Leeds hotels, as further new supply enters the market. Occupancy levels are likely to remain at approximately 70% in the near term, with little real improvement in average rate. We expect the supply of hotel rooms in the city to increase by around 20% between 2007 and 2012, and this will be the main factor holding back the performance of hotels in the city.
The good news is that the various mixed-use schemes currently under development in Leeds are expected to result in a considerable increase in business & leisure visitation. Holbeck Urban Village, a nine acre mixed-use regeneration programme, is expected to attract £800 million of investment and lead to the creation of over 5,000 new jobs. The opening of Saviles Hall, as part of the Clarence Dock Development in June 2007, has become the largest conference & exhibition centre in Leeds and will help the city attract further accommodation demand from conference and exhibition events.
