Medway Hotel Market

MEDWAY HOTEL MARKET

FACT FILE

March 2011

INTRODUCTION

Medway Hotel Market Fact File March 2011

1

As part of the Thames Gateway Growth Area, Medway is set to be transformed into a

thriving riverside city. Medway’s 20 year regeneration programme has attracted £150

million of government funding, will lever in over £6 billion of private sector investment,

and deliver 16,000 new homes and 20,000 new jobs, with Medway’s population

increasing by 50,000 over this period. The waterfront is the focus of Medway’s

regeneration activity, with over 900 ha of brownfield land and 11 kilometres of river

frontage. Key sites include Rochester Riverside (2,000 homes, 800 jobs), Chatham

Maritime (2000 homes, 250 jobs), Chatham Waterfront and Centre (1,500 homes, 3000

jobs, 250,000 sq m retail), Gillingham Waterfront and Victory Pier (800 homes and 200

jobs), Temple Waterfront (620 homes, 250 jobs, 12,300 sq m retail/employment), and

Strood Riverside and Centre (900 homes and 200 jobs). The development of

Medway’s university and college sector is resulting in further growth, with a new £25

million campus at Chatham Maritime, and a new £75 million Mid- Kent College

campus at Gillingham, and student numbers forecast to increase from 10,000 to

15,000 by 2016. Further development of the tourism offer in Medway, with the

opening in July 2010 of the No. 1 Smithery museum and art gallery at Chatham

Historic Dockyard, the potential for World Heritage Site status for the Dockyard and its

defences and a new cultural quarter for Chatham Waterfront, will generate

additional visitor numbers and raise the area’s profile. Medway also has the potential

to benefit from the London 2012 Olympic and Paralympic Games, given its

accessibility to Stratford via Ebbsfleet and the number of teams that may base their

pre-Games training camps at some of Medway’s sports facilities.

All of these developments are likely to generate a significant increase in demand for

hotel accommodation in the Medway area from the corporate market, contractors,

international and domestic leisure markets, and people visiting friends and relatives,

attending weddings, family parties and events. This growth could eventually create a

number of opportunities for further hotel development in Medway.

INTRODUCTION


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The Medway Hotel Market Fact File has been compiled to assist hotel companies,

developers and investors in assessing hotel investment opportunities in Medway. It

provides the latest available information on:

• The current hotel supply in Medway;

• Recent hotel development;

• Current hotel development proposals;

• Recent hotel performance;

• The key markets for hotel accommodation in Medway;

• The prospects for growth in demand for hotel accommodation and what will

drive this.

All of the data included in the Fact File is drawn from the Kent Hotel Futures Study

undertaken by consultants Hotel Solutions in late 2010/early 2011.

For further information and contacts or to discuss your requirements contact:

Ed Woollard

Tourism Manager

Medway Council

Civic Headquarters

Gun Wharf

Dock Road

Chatham

Kent

ME4 4TR

Tel: 01634 338122

Email: [email protected]

Ruth Wood

Research & Development Manager

Kent County Council

Invicta House 2nd Floor

County Hall

Maidstone

Kent

ME14 1XX

t.01622 696907

e. [email protected]

MEDWAY HOTEL SUPPLY


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Current Hotel Supply

• There are currently 12 hotels in Medway with a total of 800 letting bedrooms. The

Medway hotel supply is predominantly a mix of 3 star and budget hotels, together

with one 4 star hotel, a Ramada Encore upper-tier budget hotel, two small 2 star

hotels and two small non-inspected hotels.

MEDWAY HOTEL SUPPLY – MARCH 2011

Standard Hotels Rooms % of

Rooms 5 star 0 0 0

Boutique 0 0 0

4 star 1 100 12.5

3 star 2 247 30.8

2 star 2 59 7.4

Upper-tier Budget1 1 90 11.3

Budget 4 281 35.1

Non-inspected 2 23 2.9

Serviced Apartments 0 0 0

Total Hotels 12 800 100.0

Notes:

1. Brands including Holiday Inn Express, Ramada Encore and Hampton by Hilton

• The Medway hotel supply is split between Chatham, Rochester and Gillingham.

Chatham accounts for almost half of Medway’s total hotel supply and is the

location of the 4 star Bridgewood Manor, Holiday Inn Rochester-Chatham and

Ramada Encore upper-tier budget hotel at Chatham Historic Dockyard.

Gillingham has the next largest number of hotel bedrooms. The hotel supply here

is predominantly budget hotels. Gillingham also has one 3 star hotel although this

trades at budget hotel room rates. Of the three main Medway towns, Rochester

has the lowest number of hotel bedrooms. The only significant hotel here is the

Premier Inn Rochester at the Medway Valley Leisure Park in Strood. There are no

hotels of any note in the centre of Rochester.

MEDWAY HOTEL SUPPLY


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MEDWAY HOTEL SUPPLY – MARCH 2011

Location 4 Star 3 Star 2 Star Upper-Tier

Budget

Budget Non-

Inspected

TOTAL

Hotels Rooms Hotels Rooms Hotels Rooms Hotels Rooms Hotels Rooms Hotels Rooms Hotels Rooms

Chatham 1 100 1 149 1 45 1 90 1 11 5 395

Rochester 1 14 1 121 1 12 3 147

Gillingham 1 98 3 160 4 258

Total Medway 1 100 2 247 2 59 1 90 4 281 2 23 12 800

MEDWAY HOTEL SUPPLY

Medway Hotel Market Fact File March 2011 4

MEDWAY HOTELS – MARCH 2011

Establishment Grade Rooms

Chatham Bridgewood Manor 4 star 100

Holiday Inn Rochester-Chatham 3 star 149

St George 2 star 45

Ramada Encore Upper-tier Budget 90

Ship & Trades n/a 11

Rochester Gordon House, Rochester 2 star 14

Premier Inn Rochester, Medway Valley Leisure Park Budget 121

The King’s Head n/a 12

Gillingham

King Charles 3 star 98

Premier Inn Gillingham Business Park Budget 76

Premier Inn Gillingham-Rainham, Rainham Budget 26

Travelodge Medway M2, Rainham Budget 58

Changes in Supply 2005-2010

• Three new hotels have opened in Medway in the last three years, two of them in

the final quarter of 2010.

MEDWAY - NEW HOTELS 2005-2010

Hotel Location Standard No.

Rooms

Year

Opened Ramada Encore Chatham Chatham Historic

Dockyard

Upper-tier

Budget

90 2007

Premier Inn Rochester Medway Valley

Leisure Park

Budget 121 2010

(October)

Premier Inn Gillingham-

Rainham

Rainham Budget 26 2010

(November)

• There have been no extensions to any of Medway’s existing hotels over the last

three years. The Bridgewood Manor and Holiday Inn have undergone

refurbishment programmes over the last 5 years.

• The following hotels have recently closed in Medway:

o Medway Manor (2 star, 42 bedrooms);

o Royal Victoria & Bull, Rochester (27 bedrooms, not inspected).

MEDWAY HOTEL SUPPLY

Medway Hotel Market Fact File March 2011 5

Proposed Hotel Development

• There are plans for a 120-bedroom budget hotel as part of Berkeley Homes’

Victory Pier mixed-use development scheme on Gillingham Waterfront. It is

unclear however whether this hotel is proceeding due to financial problems for

the prospective developer.

• A site on Corporation Street in Rochester town centre has planning permission for

a 110-bedroom budget hotel at the back of the Visitor Information Centre. There

is currently no hotel operator or developer interest for this site.

• Outline planning permission has been granted for an 80-bedroom budget hotel

as part of the Chatham Waterfront mixed-use scheme on the Holborn Wharf site

in the centre of Chatham, alongside offices, residential apartments and

commercial units including shops, bars and restaurants.

MEDWAY HOTEL PERFORMANCE & MARKETS


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Summary

• The 3/4 star hotel market in Medway is relatively weak at present. While hotels at

this level achieve reasonably strong levels of occupancy, achieved room rates

are low by national standards and there is little evidence of hotels turning

business away. Corporate demand in Medway is not particularly strong and is

highly competitive, keeping corporate rates down as a result. Leisure demand is

primarily low-rated.

• In contrast the Medway budget hotel market has been very strong over the last 3

years. Most budget and upper-tier budget hotels have been achieving very high

occupancies and have been consistently turning business away both during the

week and at weekends, to a significant extent in one case. Budget hotel

occupancies have however dropped sharply since the opening of the new

Premier Inns at Medway Valley Leisure Park and Rainham at the end of 2010 and

budget hotels are no longer denying business at present.

Occupancy and Achieved Room Rates

• Average annual room occupancies and achieved room rates for hotels in

Medway are estimated as follows for 2008, 2009 and 2010.

MEDWAY HOTEL PERFORMANCE 2008-2010

Standard of Hotel Average Annual

Room Occupancy

%

Average Annual

Achieved Room Rate3

£

2008 2009 2010 2008 2009 2010

UK Provincial UK 3/4 Star Chain Hotels1 70.2 68.2 69.5 72.91 68.65 68.20

Medway Hotels2 74 70 72.5 53.30 51.80 51.30

Source: Kent Hotel Futures, Hotel Solutions – March 2011

Notes 1. Source: TRI Hotstats UK Chain Hotels Market Review

2. Sample: Bridgewood Manor, Holiday Inn Rochester-Chatham, Ramada Encore Chatham,

Premier Inn Gillingham Business Park, King Charles

3. Net of VAT and breakfast



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• Average annual room occupancies have been fairly strong for Medway hotels

over the last three years, above the national averages for 3/4 star chain hotels.

Budget hotel occupancies have been particularly high.

• Achieved room rates for Medway hotels are low by national standards. There is

very little difference in achieved room rate performance between hotels of

different standards. The 3 and 4 star hotels in Medway do not achieve significantly

higher average room rates than the area’s budget hotels and one 3 star hotel

trades at average room rates that are substantially below those achieved by

some of the budget hotels in Medway.

• Medway hotel occupancies dipped in 2009 as a result of the recession and the

consequent drop in corporate and training course business but largely recovered

in 2010 on the back of strong corporate demand related to project work. Hotel

occupancies in Medway have reduced significantly since the end of 2010 and so

far in 2011 as a result of the opening of the new Premier Inns at Rochester and

Rainham.

• Achieved room rates for Medway hotels reduced in 2009 and 2010 as a result of

the recession.

Midweek/Weekend Occupancies

• Estimated weekday and weekend occupancy for Medway hotels in 2010 are

summarised in the table below.

MEDWAY HOTELS - WEEKDAY/ WEEKEND OCCUPANCIES – 2010

Typical Room Occupancy

%

Mon-Thurs Friday Saturday Sunday

80 54 86 39

Source: Kent Hotel Futures, Hotel Solutions – March 2011



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• Midweek occupancies were strong for Medway hotels in 2010, particularly at the

budget level. Tuesday and Wednesday nights were the strongest, with budget

hotels frequently filling and turning business away on these nights during 2010, to a

significant extent in one case. 3/4 star hotels only occasionally filled and turned

away business on Tuesday and Wednesday nights. Monday and especially

Thursday nights were generally weaker particularly at the 3/4 star level. Midweek

occupancies are fairly steady throughout the year. Some hotels report lower

midweek occupancies between December and March.

• Saturday occupancies are generally strong for most Medway hotels throughout

the year. Friday and especially Sunday night occupancies are much lower.

Weekend demand is stronger between April and September and can be very low

during the winter months.

Midweek Markets and Trends

• Corporate demand from Medway companies is the main source of midweek

demand for 3/4 star and upper-tier budget hotels in Medway. Two 3/4 star hotels

attract a small amount of residential conference and training course business,

primarily small events for around 15-20 delegates, typically involving a two night

stay. Contractors are a significant midweek market for one 3/4 star hotel and a

secondary midweek market for another. All Medway 3/4 star hotels take some

midweek group tour business during the summer months. One hotel also attracts

some midweek leisure break business in the summer.

• Budget hotels in Medway attract a mix of corporate and contractor demand

during the week. They also attract some midweek business from people visiting

friends and relatives, attending funerals or visiting people in hospital.

• While Medway hotels attract much of their corporate business from companies in

their immediate vicinity, most hotels also attract business from companies in other

parts of Medway. Corporate demand is often project-related and unpredictable

therefore. The Medway corporate market is highly competitive, which keeps

corporate rates at a relatively low level.



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• The Isle of Grain power station generates significant contractor demand for

budget and low-priced hotel accommodation in Medway.

• In terms of trends in midweek demand:

o Corporate demand reduced sharply in 2009 as a result of the recession in

terms of volume and rate, length of stay and Sunday arrivals. Most hotels

have seen some recovery in corporate demand in 2010 and one reported

strong growth in corporate business.

o Residential conference and training course business has reduced

significantly in 2009 and 2010 as a result of the recession.

Weekend Markets and Trends

• Medway 3/4 star hotels attract a mix of weekend business from group tours,

weekend breaks, weddings and functions and people visiting friends and

relatives. Local events also generate a small amount of business for some hotels.

• Weekend break business is largely rate driven through special offer promotions by

the hotel chains represented in Medway. Medway does not appear to be seen

as a leisure break destination despite it having a strong visitor offer in terms of

Chatham Historic Dockyard, Dicken’s World and Rochester Castle and Cathedral.

The area primarily attracts day visitors.

• Group tours are from the UK and Europe, most typically involving a two-night stay

in Medway as part of a wider tour. Group tour rates are generally around £35-40

per person dinner, bed and breakfast.

• Budget and upper-tier budget hotels primarily attract weekend demand from

people attending weddings and other family parties and visiting friends and

relatives. Some budget and low-priced hotels also attract weekend demand from

contractors and small amounts of business related to local events.



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• Events that generate some demand for hotels in Medway include:

o Rochester Dickens Festival

o Rochester Dickensian Christmas Festival

o Rochester Sweeps Festival

o Events at Chatham Historic Dockyard

o Sports events at Medway Park

o Major conferences and conventions at Priestfield Stadium

• Weekend markets have generally held up over the last 3 years. One hotel

reported an increase in weddings business. Another reported a reduction in

weekend lengths of stay, with more people opting for only a Saturday night stay

and reduced demand for Friday nights.

Denied Business1

• 3/4 star hotels in Medway rarely deny business either during the week or at

weekends.

• Most Medway budget hotels were regularly turning away significant business for

most of 2010 from Monday to Thursday, on Saturday nights and on Friday nights

between July and September. They have ceased to do so however since the

opening of the new Premier Inns at Medway Valley Leisure Park and Rainham at

the end of 2010.

1 Business that hotels turn away because they are fully booked



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Prospects for 2011 • Most Medway hotel managers expect to see a significant drop in occupancy

and rate in 2011 as a result of the opening of the new Premier Inns. A number of

hotels have reduced their room rates to enable them to compete with these new

hotels.

• There are some signs of recovery in the training course market.

• Two hotels plan to target the group tour market in 2011 to boost their occupancy

levels. This is a lower-rated market that is thus likely to contribute to a drop in

achieved room rates for these hotels.

PROSPECTS FOR GROWTH


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Strategic Context

� Medway is part of the Thames Gateway Growth Area, the largest regeneration

project in Europe, and one of 4 Growth Areas identified by Government to deliver

significant levels of new housing and jobs in and around the South East. Medway’s

20 year regeneration programme has attracted over £150 million of government

investment, which is to unlock over £6 billion of private sector investment over the

next 10 years. The programme is targeted to create 16,000 new homes and more

than 20,000 new jobs, transforming Medway into a thriving riverside city. Medway’s

population is forecast to expand from the 2009 level of 254,000 to 300,000 by 2021.

� Medway Council is making a bid for city status for Medway under the competition to

designate a new UK city to mark the Queen’s Diamond Jubilee in 2012. This could

significantly help to market Medway to investors, both nationally and internationally.

� Medway Waterfront is the focus for Medway’s regeneration activity, with over 900

hectares of brownfield land across 14 sites, spanning 11 kilometres of the River

Medway



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Medway – Key Regeneration & Development Schemes



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� Key projects that will help deliver the Medway vision and associated targets

include:

o Rochester Riverside

� The flagship Rochester Riverside scheme is a 30 hectare site with a range

of proposed uses including housing, offices, hotels, a school, local

leisure/shopping, cafes and bars. It is targeted to deliver 2,000 new

homes by 2022 and 800 new jobs.

o Chatham Maritime, Waterfront and Centre

� A £1 billion regeneration programme is underway to transform Chatham

as the new city centre of Medway. The area around the railway station

will become a new business quarter. Proposals include the £160m

refurbishment and expansion of the existing Pentagon Shopping Centre,

a new bus station, and remodelling of the road system, on which work

has started. 1,500 new dwellings and 3,000 new jobs plus 250,000 sq m

retail will be delivered here.

� Chatham Maritime & St Mary’s Island is the most advanced of the

waterfront sites in Medway, with much of the residential development, a

hotel, the Dockside Outlet Village, the Dickens World attraction and the

University Campus in place. Some land is still available. On completion it

is targeted to deliver 2,000 homes and 250 new jobs.

� Chatham Port is the Commercial Dock, where potential has been

identified for a mixed use development and 600 homes.

o Gillingham Waterfront

� Gillingham Waterfront extends to 32 hectares, with proposals for 800

homes being developed alongside marine activity and the potential to

create 200 jobs. This site includes Berkeley Homes’ Victory Pier

development (under construction), which will also deliver bars,

restaurants, a hotel and student accommodation



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o Temple Waterfront

� Proposals for the 28 ha Temple Waterfront site include a £100m scheme

to deliver 620 homes and 12,300 sq m of retail and employment space

creating 250 jobs. Outline planning has been granted. La Farge are

leading the project.

o Strood Centre and Waterfront

� Strood Centre - 350 new homes and 200 new jobs are proposed here

plus major infrastructure works to relieve congestion and improve public

realm.

� Strood Civic Centre – this is a future regeneration site overlooking the

river for which a development plan is to be prepared.

� Strood Riverside - a masterplan is now in place for this 10ha site. 550

homes are planned here alongside small retail, business and food and

drink uses.

o Developing Medway’s University & Higher Education Sector

� Medway has 3 Universities focused on the new £25 million Medway

Campus at Chatham Maritime - the University of Kent, the University of

Greenwich, and Canterbury Christ Church University, as well as the

University College of Creative Arts at Rochester. In addition, the area

has Mid-Kent College, which has recently relocated to a new £75 million

campus in Gillingham. There are 10,000 students currently, to increase to

15,000 by 2016.



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o Developing the Medway Tourism Offer

� Medway Council’s Tourism Strategy seeks to continue the development

of Rochester’s heritage product, but also to develop Medway’s cultural

offer and the evening economy beyond Rochester. The opening of the

Dickens World attraction has boosted visitor numbers to Chatham

(180,000 visitors) and the Dockside Outlet Village has created another

destination to complement this and the Historic Dockyard offer. The £13

million No.1 Smithery: National Treasures Inspiring Culture opened in July

2010 as a brand new interactive museum and gallery showcasing

unique and previously unseen maritime artefacts and national and

international touring art. Future projects with the potential to expand

Medway’s tourism offer and further raise its profile with visitors include:

- The bid for World Heritage Site status for Chatham Historic

Dockyard and its surrounding fortifications;

- The development of a new cultural quarter as part of Chatham

Waterfront, including a waterfront theatre.

o Medway Park

� The £11.1 million Medway Park centre of sporting excellence opened at

Gillingham in April 2010. The centre secured a number of major sporting

events in 2010 including the Modern Pentathlon World Cup, the National

Tetrathlon Championships, the Kent International Judo Championships

and the ETTA Butterfly Grand Prix table tennis tournament. It is hosting

the Modern Pentathlon European Championships in 2011 and will host

the British Transplant Games in 2012.



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o London 2012 Olympics & Paralympics Pre-Games Training Camps

� Medway has 5 sports venues that have been accredited pre-Games

training camps:

- Medway Park has been accredited for Olympic Pre Games

Training Camps for athletics, badminton, basketball, boxing,

fencing, gymnastics, artistic gymnastics, rhythmic, Gymnastics,

trampoline, modern pentathlon, taekwondo, volleyball, wrestling.

It is also accredited as a Pre Games Training Camp for a number

of Paralympic sports.

- Gillingham Football Club for archery and football.

- Howard Table Tennis Centre for table tennis.

- Jumpers Rebound Centre for gymnastics and trampoline.

- Castlemaine Badminton Centre for badminton.

o The Isle of Grain Power Station

� EON is currently developing a new gas fired power station on the Isle of

Grain at a cost of £500 million, to replace the existing oil fired power

station when it comes to the end of its life in 2015. The development is

forecast to create 1000 construction jobs.

o Lodge Hill, Chattenden

� A new community is to be developed at Lodge Hill, north of the River

Medway, with the potential to deliver 4,500-5,000 new homes alongside

commercial, retail and community provision. This is an ex-military site to

be developed in partnership with Land Securities over a 20 year period.



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Future Prospects by Market

• Contractor demand for budget and low-priced hotel accommodation is set to

increase significantly in Medway over the next 5-10 years given the levels of

construction work that will be taking place as the major regeneration schemes

are progressed.

• There should eventually be strong growth in corporate demand for hotel

accommodation in Medway given the planned office development and

employment growth, depending on the companies and industry sectors that are

attracted to the area.

• Medway’s 3/4 star hotels could see some growth in demand for residential

conferences as the area develops and new companies and industries are

attracted. The residential conference market has however generally been

declining across the UK for a number of years, as companies have cut back on

meeting and training budgets, developed their own meeting and training

facilities and made greater use of video, internet and telephone conferencing.

Growth in this market is thus likely to be relatively slow and residential conferences

are likely to remain a minor secondary midweek market for most hotels.

• The expansion of the universities in Medway could generate increased demand

for hotel accommodation during graduation weeks, from parents visiting

students, from visiting academics, lecturers and examiners and in relation to

conferences held at the universities.

• Demand from people attending weddings, funerals, family parties and other

functions and from people visiting friends and relatives should increase steadily,

given the projected growth in Medway’s population.

• There could be scope for Medway hotels to develop leisure break business given

the existing and developing visitor offer in Chatham and Rochester. The

challenge will be to raise awareness of Medway as a leisure break destination.



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• Medway hotels should also be able to develop group tour business on the back

of the Chatham and Rochester visitor offer and Medway’s accessibility to other

parts of Kent and London. While this may be lower-rated business hotels can use

this market to boost off-peak periods and to give them base business to assist

them in yielding room rates.

• Sports events at Medway Park could generate new demand for hotel

accommodation in Medway. The centre has already been successful in

attracting a number of international sporting championships and tournaments in

2010 and 2011.

• Demand for budget and low-priced hotel accommodation from people wanting

to stay over after a night out could increase in Chatham town centre as its

evening economy develops and the area’s population increases.

• There is likely to be significant demand for hotel accommodation in Medway

from spectators attending the London 2012 Olympic and Paralympic Games in

the summer of 2012. The evidence from previous Games is that spectators will

stay up to 2 hours away from the Olympic Park. Many of the hotels close to the

Olympic Park and in Central London have already been booked up for officials,

sponsors and press and media teams. There will be a drive to encourage London

2012 spectators to use public transport. With journey times of 19 minutes to the

Olympic Stadium from Ebbsfleet and strong links by motorway to Dover, Gatwick

and Stansted, Medway is well placed to act as a base for Olympic and

Paralympic spectators. Olympic and Paralympic teams using the accredited

Olympic Pre Games Training Camps in Medway may also require hotel

accommodation in the run up to the Games.

SOURCES OF FURTHER INFORMATION


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For further information and contacts or to discuss your requirements contact:

Ed Woollard

Tourism Manager

Medway Council

Civic Headquarters

Gun Wharf

Dock Road

Chatham

Kent

ME4 4TR

Tel: 01634 338122

Email: [email protected]

Ruth Wood

Research & Development Manager

Kent County Council

Invicta House 2nd Floor

County Hall

Maidstone

Kent

ME14 1XX

t.01622 696907

e. [email protected]

The following websites provide further information on the plans and strategies for

Medway:

Medway Renaissance

www.medwayrenaissance.com

Chatham Maritime

www.chatham-maritime.co.uk

Victory Pier, Gillingham

www.berkeleygroup.co.uk/berkeley-first/victory-pier

Lodge Hill

www.lodgehill.info

SOURCES OF FURTHER INFORMATION


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Visit Kent Business

The latest facts and figures on tourism in Medway and Kent are available from Visit

Kent’s ‘Visit Kent Business’ website through the following links:

www.visitkentbusiness.co.uk/index/research-development/research/Economic-Impact/

www.visitkentbusiness.co.uk/index/research-development/research/Business-Barometer/

Documents

Medway Hotel Market