Hotel & Leisure

Hotel & Leisure

Hotel & Leisure – Overview

Construction-starts and main contract awards experienced declines on the 2022 levels. In contrast, detailed planning approvals increased on the preceding three months and last year, providing a boost to the development pipeline.

Totalling £815 million, hotel & leisure projects starting on-site during the first quarter of 2023 fell 2% against the preceding three months and were 14% down on the previous year’s levels. Major projects (£100 million or more in value) commencing on-site totalled £250 million, a 25% increase on the previous quarter, and an improvement from last year when there were no project-starts. Underlying project-starts (less than £100 million) slipped back 44% against the preceding three months on a seasonally adjusted (SA) basis and were 40% lower compared with a year ago.

At £568 million, hotel & leisure main contract awards increased 54% against the preceding quarter but stood one-third down compared to the previous year. No major projects reached the contract awarded stage, unchanged against the preceding quarter but down on the previous year. Underlying contract awards increased 85% (SA) against the preceding quarter and 1% compared with a year ago.

At £1,933 million, hotel & leisure detailed planning approvals jumped 85% during the quarter to stand 11% up on the previous year. Underlying approvals increased 30% (SA) against the preceding three months and grew 10% against the previous year, totalling £1,243 million. Major projects totalled £690 million during the period, three times higher than the last quarter of 2022 and 15% up on a year ago.

Hotel & Leisure – Types of Projects Started

Indoor leisure facilities accounted for the greatest proportion (53%) of sector work starting on-site during the three months to March, with the value adding up to £435 million. The segment more than tripled compared with last year’s levels. Cinema and theatre project-starts also performed well, having doubled against the previous year to total £154 million, accounting for 19% of the sector.

In contrast, accounting for a tenth of the sector, sport facilities slipped back 47% on last year’s levels to total £83 million. Hotel project-starts also experienced a weak period, with the value of project-starts falling 79% compared with a year ago to total £65 million, an 8% share of the sector. Cafés, restaurants, and fast-food outlets experienced the steepest decline of 89% against the preceding year. As a result, the segment only accounted for 2% of the sector with a total value of £12 million.

Regional Analysis – Project-Starts

The North West accounted for the greatest proportion of hotel & leisure work starting on-site (41%), thanks to the value increasing 73% against the previous year, which was accelerated by the commencement of the £250 million Therme Manchester wellbeing resort (Project ID: 19255727). Project-starts in the North West added up to £333 million during the first quarter of 2023. The East Midlands accounted for the second greatest share of starts (15%), with the value of work adding up to £126 million, having doubled compared with last year’s levels. Project-starts in the region included a £45 million performance venue in Derby (Project ID: 21350515). Accounting for 7% of project-starts in the sector, Scotland was another region that experienced growth during the period, with the value of project-starts increasing 15% to total £54 million.

In contrast, at £81 million project-starts in London slipped back 53% against the previous year, despite accounting for the third greatest share of 10%. Project-starts in the East of England also decreased 37% to total £73 million, a 9% share of hotel & leisure project-starts in the UK. The South East accounted for 5% of projects starting on-site in the sector, totalling £43 million, which is 20% down on a year ago. Yorkshire totalled £35 million, which accounts for 4% of the sector. Project-starts in the region fell 74%.

Hotel & leisure Project-Starts during the three months to March 2023

Regional Analysis – Detailed Planning Approvals

Yorkshire & the Humber accounted for the highest share of project approvals (21%), having more than tripled against the previous year to total £405 million. The growth was accelerated by the approval of the £210 million phase one of the Cultural Heart programme in Huddersfield (Project ID: 06431582). Consents in Wales also jumped 62% compared with the 2022 levels, adding up to £341 million, an 18% share of the sector. Approvals in the region included the £280 million phase one of the Atlantic Wharf Arena development in Cardiff (Project ID: 21427440).

At £249 million, the North West was the third most active region in hotel & leisure project approvals. The value of consents in the region almost tripled against last year, making it account for 13% of the sector.  Totalling £195 million, the South East experienced an increase of 63% to account for a 10% share of approvals.

In contrast, despite accounting for 12%, Scotland slipped back 26% compared with the first quarter of 2022 to total £229 million. Further decline was prevented by a £200 million hotel and office development in Edinburgh (Project ID: 20183179). London also had a poor performance, with approvals decreasing 65% on a year ago, totalling £164 million.

Hotel & leisure Detailed Planning Approvals during the three months to March 2023

Forecast Construction-Starts for Hotel & Leisure

Note: Underlying projects are schemes with a construction value of £250,000 to £100 million.  Forecast updated in April 2023 p – provisional, f – forecast.
Source: Glenigan