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Hotel and leisure construction activity on the up

By Carina Perkins+ , 22-Aug-2014
Last updated on 22-Aug-2014 at 13:02 GMT2014-08-22T13:02:25Z

Hotel, leisure and sport construction values rose in July after a flurry of North West activity
Hotel, leisure and sport construction values rose in July after a flurry of North West activity

As UK hotel transactions return to pre-crisis levels , the value of construction contracts for new properties has also started to show upward movement.

According to the latest Economic & Construction Market Review from Barbour ABI, hotel, leisure and sport construction contracts reached £364m in July, an 11 per cent increase compared to June 2014, with year-on-year levels up 12 per cent.

New hotels and motels accounted for the majority (59 per cent) of contracts awarded during the month, with audience and exhibition centres accounting for 14 per cent and leisure centres 19 per cent.

The July uplift in new hotel and leisure construction comes following a dip in activity, with the value of contracts in the three months to July down 26.6 per cent compared to the previous three months, and 7.1 per cent year-on-year.

North West

According to Barbour ABI the North West was at the forefront of new construction activity in the hotel, leisure and sports sector in July, with contract values up 21 per cent year-on-year to £105m -  29 per cent of the UK total.

Barbour ABI said new construction in the region included the £40m regeneration of Barons Quay in Northwich and a brand new 326 room 19 storey hotel which is being built as part Manchester Business School’s £1billion campus masterplan.

“With a number of large construction projects commissioned this month and the upcoming regeneration of Manchester Business School, it's an exciting time for the region and local industry, which should see first-hand the economic benefits for the area,” said Barbour ABI lead economist Michael Dall.

Investment on the up

According to figures released by Deloitte earlier this month, mergers and acquisitions in the hotel sector were up 65 per cent in the first half of this year, with total hotel transactions hitting £1.5bn – the highest H1 level since 2007.

Regions accounted for 60 per cent of M&A volumes, although London led the way in terms of deal size.

Deloitte said it anticipated ‘continued strong interest from investors’ through the rest of the year, although warned lack of product could hinder growth.

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