The UK’s rapidly expanding budget hotel industry is using the credit crunch to exploit sites previously earmarked for office or residential development.
Travelodge was the first to reveal it had been eyeing empty office space in London for potential conversions following news that the capital’s glut of space was set to skyrocket.
But now rival Premier Inn – run by hotel and restaurant group Whitbread – has said it is benefiting from opportunities that have rarely been available.
The company has announced investment plans of £100 million, which would see another nine hotels developed across the country.
The plans include office block conversions in Preston, Lancashire, and Doncaster in South Yorkshire.
Whitbread said it was also involved in two development opportunities in London that would have traditionally been considered natural sites for apartments or office space.
The proposals are for a 325-room hotel in Aldgate on the edge of the City and a 194-room hotel in Greenwich.
Other projects include a 60-room hotel and restaurant in Glasgow, another in Trowbridge and a 55-room hotel in Newport.
The firm’s property director Mark Anderson said with the worsening troubles in the financial sector the number of such opportunities had increased dramatically over the past few months.
He estimated that as many as a quarter of all possible projects presented to him were now former office or residential developments.
The announcement of the investment plans came a week after the firm revealed it was to acquire 21 hotels, currently operating as Express by Holiday Inn, from hospitality company Mitchells & Butlers. It plans to re-brand the sites under the Premier Inn logo.
Mr Anderson said: “Our property acquisitions team is identifying prime sites across the UK and Ireland as we roll out our expansion plans.
“We have disciplined targets for growth and these investments demonstrate that we are well on our way to delivering them.”
Premier Inn and Travelodge currently control more than 60 per cent of the budget market between them, with both keen to expand rapidly.
Premier Inn – which this year plans to add 2,500 rooms across 22 hotels, up from 36,000 currently – is aiming for a target of 55,000 rooms within five years.
Travelodge plans to open 1,400 rooms across 13 hotels, up from 22,500 this year. Its goal is to hit 70,000 rooms in under 12 years.
The chain’s head of property and development, Paul Harvey, described the growing levels of unlet space in London as “very good news for us and an opportunity that has never been there for us before”.
He said the firm was constantly on the hunt for space it can easily turn into hotels.