An increasing number of unprofitable hotel rooms are becoming available in the UK as planning laws prevent the buildings from being converted to other use.
The caution came from Graeme Smith, partner at advisory and restructuring firm Zolfo Cooper, commenting on the restructuring of Travelodge’s portfolio announced on Monday.
“It’s disappointing to hear that currently only four of the 38 Travelodge hotels offloaded will actually change use, with the majority of the remainder falling into the hands of other hoteliers,” he said.
“In many UK locations, there is an excessive supply of hotels. Combined with the fact that 2012 saw more hotel rooms open than any other year in the past decade, this means that an increasing number of unprofitable sites are appearing as a result.
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Smith added: “A more flexible approach to planning by local authorities to allow developers to change the use of existing hotels could help create a virtuous circle for the sector.
“Fewer hotels chasing current flat demand levels would enable hoteliers to generate increased profits and make much needed investment in their hotels. This in turn would improve the overall experience for guests and drive more repeat custom.
“Unless steps like this can be taken, hotel owners will simply continue to slash prices in face of increased competition, which will put even more pressure on businesses operating in this industry.”
A Travelodge spokesman said: “In today’s world, Britons are looking for great value when making a hotel booking. The UK, at less than 20%, remains a growing market for branded budget accommodation as it is still well behind mature markets such as the USA and France.”