Heathrow third runway to lift hotel room demand

Photo: Paul Robertson

Plans for expanding the UK airport, which was initially scrapped in 2010 over environmental concerns, were recently given a new lease of life, as the Airports Commission recommended a new runway. A final decision will be made this year.

While protestors campaign against the expansion at Heathrow, though, Savills’ research shows that the commercial property market would benefit from the addition, with demand for hotel rooms expected to soar by 42 per cent, the equivalent of 3,500 additional beds.

Marie Hickey, commercial research director at Savills, adds: “The historical link between airport passenger numbers and hotel demand implies that Heathrow’s third runway will generate the requirement for new supply. This will lead to the introduction of new product types and brands, providing greater convenience for travellers.”

10-year average occupancy rates for airport hotels are around 78-79 per cent at present, which makes them attractive to operators, despite average daily rates being lower than city centre developments. Indeed, a rise in passenger numbers of 1.4 per cent last year has already drawn new hotel brands, notes the advisors, including pod hotel concepts, such as Yotel and budget boutique operators, such as Bloc.

James Bradley, associate director of hotels at Savills, comments: “These products are well suited to the short stay airport hotel guest and we expect to see this type of brand expand around Heathrow now the third runway has been confirmed.”

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