EDINBURGH’S budget hotels boom “must be slowed” to prevent the capital’s hotel market becoming unbalanced, a report has warned
It is estimated that the number of rooms in “limited service” hotels in the city, such as the Easyhotel on Princes Street and Motel One on Market Street, has rocketed from 890 to more than 3,000 in the past seven years, while traditional hotels have seen much more modest growth.
A further 390 rooms will be added to the budget end of the sector after Motel One opens its second Edinburgh hotel this summer and the Accor-owned Ibis opens at the fire-struck former university site on Cowgate. The city’s Caltongate site, which recently had its planning approval extended by three years, is also expected to play host to a limited service operation in one of its three planned hotel units.
The warning was revealed in a report published by property agency Colliers International, which expects the biggest losers to be bed and breakfast operations and guesthouses.
Alistair Letham, director, hotel agency with Colliers in Scotland, said: “The traditional serviced hotels sector can weather the storm. It is the smaller units – the B&Bs and the guest houses – that are being affected more. Either they are being pushed out of the market completely or their rates have been pushed down. In Edinburgh the only developments of new hotels that have been going on in the last few years have largely been in the budget or limited service sector of the industry.”
He said the growth in the cheap end of the sector was because of its attractiveness to lenders and was therefore “fundable”.
“If you are dealing with a three or four-star fully serviced hotel, the leasing is not so prevalent these days,” he added.
It is thought that use of the planning system would not be an effective way to determine the type of hotel being developed.
“The only way you slow it is having developments at the other end – I don’t think you can slow the growth of the limited service sector but what you want to see is balance and get other hotels up and running,” said Letham.
“People want limited service hotels – that is where the demand is. People are happy not to have the all-singing all-dancing hotel service.
“The other sectors have to wake up to that.”
Norman Springford, the chairman of Edinburgh-based Apex Hotels, admitted that his Edinburgh hotels were currently “toiling” as a result of competition at the low end of the market where the limited service sector was “clearly waking up”.
But he expects the fashion for limited service hotels to fade due to “amenity creep”, with visitors demanding more facilities.
He said: “There will inevitably be this what we would call ‘amenity creep’ where limited service hotels will start adding things – you put in one set of towels and then you think it would be better to put in two sets of towels, then improve the toiletries.”
Letham predicted that there will be “at least one limited service” hotel at the Caltongate site.