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Allan Sugg on Hotel and Leisure

Q&A with Allan Sugg, Partner, specialising in hotels, EC Harris

How is the market looking?

The hotel business is looking like a very, very good business at the moment in both new build and refurbishment. One of the key drivers is the Olympics with many hotels looking at maintaining their brand positions.

What is happening other than planning for the Olympics?

New developments are slightly more concerning with a significant number of new high-rise developments. These are usually mixed-use schemes which require debt funding, and the impact of the credit crunch on the cost of borrowing is significant. The challenge to consultants is bringing in experience to design the towers.

Ian Simpson is the guru of high-rise, mixed-use schemes but firms like his can be selective and make sure they back the right horse. From a developer’s perspective, the team has to provide cost effective, workable designs.

What are going to be the big issues for the market in 2008?

One will be the number of hotel brands arriving in the UK, particularly in London that are not currently here. London is recognised as one of the global cities and there are a few hotel brands from the Middle East and the Far East that want to get here.

But I thought we would be seeing a lot more contractors coming into the market. European firms don’t relish the UK – the culture and the regulations are different. The market is overheating and contractors are being selective but why aren’t the Europeans trying to fill the vacuum?

Are there resource issues?

There is also a huge problem with the economies of supply and demand. The price goes up and with issues like cladding and other components becoming scarcer. There doesn’t seem to be an end to it and it takes a long while to open a new tap. You can’t form a cladding firm overnight and the future is that the supply chain will be dictating whether schemes get built or not. It will get worse before it gets better.

What new technology might we see?

Green issues will be important this year. Most hotel chains and developers do their damnedest to spend the minimum amount of money on this that they can, but we are already seeing sustainability and better use of energy in buildings.

Pre-fabrication is important too. It has different ends of the scale and modular construction is more suited to the budget end of the market.