hotbed of dealsactivity
23/06/2007 00:00
Star quality Birmingham needs more hotel space if it is to compete with rivals. Two luxury hotel brands could soon be opening with more to come. Ian Halstead reports
The race is on to unveil Birmingham's most luxurious hotel, with two of the biggest mixed-use schemes set to sign major brands.
Ballymore Properties is close to landing Birmingham's first five-star name at Snowhill, while Mailbox duo Alan Chatham and Mark Billingham expect to complete negotiations with a boutique brand for the Cube, the final phase of its mixed-use Mailbox complex, this month.
Ballymore is in due diligence with a preferred operator for its 23-storey hotel. Although it will not identify the brand, observers put the Starwood Group's Sheraton or Hilton firmly in the frame.
The Ken Shuttleworth-designed Cube is bringing in Conran for its rooftop restaurant, and the search for an equally high-end 40-bedroom hotel is down to the last two on the Mailbox shortlist.
Boost needed
A major boost to the city's overall stock of bedrooms is much needed, say Jones Lang LaSalle's national hotels team. The four-star Radisson SAS has been the city's only recent top-end arrival in recent years.
Senior vice-president Graham Dodd calculates that just 40 bedrooms will be added to Birmingham's hotels sector this year, while Manchester will see 1,221 come on stream. He adds that, during 2008, not one new hotel room will open in Birmingham but 681 will in its northern rival.
The statistics appear alarming but, though his comments might seem predictable, Marketing Birmingham's commercial director Ian Taylor suggests the figures are not as gloomy as they appear.
He insists that the strength of a city's hotel sector cannot be measured in terms of bed stock or occupancy levels, as long as neither is out of kilter with other regional centres.
"The key figures are the room rates achieved by operators, and the amount of money spent locally by people using those hotels," says Taylor.
Demand for beds in Birmingham is increasing. Deloitte & Touche's national Hotel Benchmark survey states occupancy rates have been edging up since 2000, and are averaging around the 70% mark.
Martin Armistead - who heads DTZ's hotels team in Europe, the Middle East and Africa - says crossing the 70% benchmark is a critical and healthy sign.
"Typically, it means that a location has unsatisfied demand, and Birmingham certainly has scope for several hotels of four stars and upward," he says.
He sees Richardson Developments' scheme on Broad Street as "ripe for a four-star-plus", and considers Digbeth's Irish Quarter another strong prospect.
There has been much discussion that Jurys Inn would come to the latter area, but Armistead expects a more upmarket brand.
Meanwhile, Knight Frank surveyor Mark Jones says budget brands, such as Travelodge and Accor Hotels, are desperate to increase their Birmingham presence. Jones also believes one of the world's biggest luxury brands - Armani Hotels - is eyeing the city.
Development mismatch
Two years of effective stagnation in the number of hotel beds is hard to square with the city's buoyant development sector, availability of sites and rising demand.
Jack Glonek - an assistant director in the city council's development directorate - believes the apparent mismatch lies in developers' focus in Birmingham on major mixed-use projects, which will include hotels, rather than standalone hotel schemes.
He cites the Cube, Snowhill, Eastside, Arena Central, the Richardsons' Broad Street scheme, Calthorpe's Edgbaston Mill and Chord Deeley's Jewellery Quarter project as examples of the trend.
Unfortunately, the time needed to assemble the land and win planning for such major projects stretches the hotel delivery timetable.
Other cities such as Bath, Edinburgh and Manchester have attracted top-end brands into refurbished buildings.
Manchester's five-star Radisson Edwardian was created from the 19th century Free Trade Hall, and three other top-end hotels have also emerged from recent refurbishments.
"The old Manchester economy left behind a significant number of buildings, often old warehouses, suitable for conversion," says Glonek.
In Birmingham, however - the impressive Hotel du Vin's presence inside the former Eye Hospital apart - operators have had fewer options.
Inevitably, there have been missed opportunities. Targetfollow's Baskerville House on Centenary Square could have been an eye-catching hotel and several boutique operators looked at the equally imposing 301 Broad Street directly opposite.
Elsewhere, Hortons' Estate has been tight-lipped about plans for its former Grand Hotel site, now shrouded behind scaffolding and builders' sheets. The scheme hit a major setback recently after the grade-II listing of its ballroom meant that it could not be redeveloped - in a joint venture with Richardson Developments - into a major office development.
Hortons is now working on revised plans for the famous Colmore Row building, which should be unveiled by the autumn.