Tourism report sounds alert over impact of city hotel developments
If performance drops back significantly, proposals for new hotels may be delayed or possibly cancelled
The impact of three new hotels opening in Bath on existing businesses will be felt until 2030, according to a new report. Hotel Indigo, No 5 Pierrepont Street and the Dominvs Group development in James Street West will collectively add 372 bed spaces to the city’s supply, which has increased by nearly 50 per cent since 2009 to 9,921. The market is also feeling the impact of the significant growth of Airbnb properties, which make up 6 per cent of the supply. The report has been drawn up by consultants Hotel Solutions for Bath and North East Somerset Council as an update on how the industry has changed since 2015. It found that across Bath and North East Somerset there are 1,398 establishments and 12,227 bed spaces, although that figure is only an estimate because there are so many different channels that can be used to book them. Demand for hotel rooms in Bath has increased by 23.5 per cent since 2015 but the supply is also growing. The 177-bed Apex and the Z Hotel with its 149 bedrooms are the biggest arrivals since then. Hotel Indigo and No 5 Pierrepont Street are set to open next year. When they are completed, the number of hotel bed spaces in Bath will be up more than 60 per cent compared to 2009, and 37.5 per cent since 2015. Growth has been biggest in boutique hotels - since 2009 the number of rooms has seen a tenfold increase to 342. In contrast, the three-star market has slumped by 80 per cent and now there are only 70 rooms. The number of budget or limited service rooms has doubled to 649. Existing hotels will feel the impact of the Hotel Indigo and No 5 Pierrepont Street until 2027, the report says. The Dominvs Group’s boutique project, on the site of Bath College’s Allen Building, could extend that beyond 2030. Hoteliers had urged B&NES Council to release the report before the development was approved last month for that very reason. Hotel Solutions’ projections show that the market is “unlikely to be able to support this hotel for some time without impacting on existing hotels”. It adds: “If performance drops back significantly, proposals for new hotels may be delayed or possibly cancelled and hotel developer interest is likely to wane.” However, the document estimates that between 89 and 849 additional new rooms may be needed by 2036. The report says: “A number of the hotel managers and owners that we spoke to in Bath reported that they are facing rapidly increasing operating costs, particularly in terms of staff wages, business rates, energy costs and food prices. “With reducing occupancies and room rates it is evident that hotel profits are also reducing in Bath.” It adds: “Hotels have to pay higher wages to attract and retain staff, which affects their bottom line. The situation is set to worsen over the next year as further new hotels open.” The report says staff recruitment and retention is a “major issues” for Bath hotels, made worse by new openings and Brexit. Local people are not interested in working in hospitality, workers cannot afford to rent and it is too expensive for hotels to buy properties for them to live in. It is optimistic, however, about the hotel market overall, which “remains very strong by national performance metrics” and says the new openings have created a much more competitive market. A number of brands are actively pursuing opportunities in the city, including Premier Inn, which has told commercial property agents that it is seeking another two sites in the city. In contrast, Bath’s guest houses and B&BS have been on the decline over the last three years, driven by the new hotels opening, the growth of Airbnb and similar platforms, and the increased year-round availability of city centre student rooms for short stays. The University of Bath advertises 326 bedrooms over the summer, and has another 2,200 available for conferences and summer schools. Bath Spa University may start marketing the 500 student bedrooms at Green Park House at some point in the future, according to the report. Guest houses and B&BS could reposition themselves to target specific markets like vegetarians or the LGBT community, it says. In North East Somerset there is a “frustrated demand” for camping, and opportunities for pub lodges, country house hotels and more innovative options like treehouses, glamping, golf lodges and wellness retreats. The report says the planning system is a major constraint and nothing is currently coming through. It is not yet clear when B&NES Council will consider the report.