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Increase in pod format hotels predicted12th March 2014

Increase in pod format hotels predictedPod style hotels similar to those in London could be catching on in UK regional cities according to international real estate advisor Savills. Up to four new hotels are planned to open in regional cities for 2014/15.

Savills said that the recently announced (yet to be named) 76 pod hotel in Bristol could be the first one delivered this year, with Moxy, the Ikea and Marriott International backed hotel, also acquiring a site at Liverpool’s Cropper Street. Other brands in the market include Yotel, citizen M, and ZHotel and Whitbread’s Premier Hubs.

Martin Rogers, director of regional hotels at Savills, said: “The rise of pods and smaller format hotels throughout the UK can largely be attributed to cost. If room count can be increased by providing smaller rooms without significantly impacting on average daily rates there can, in the right circumstances, be a positive impact on value. Land values have also contributed, for example in cities where land values have increased by between 10-20 per cent, such as Bristol, Manchester and York, developers are now having to intensify sites and making rooms smaller is the easiest way.”

With most pod hotels costing between £45 - £100 per night, the expansion of the format across the UK could require traditional hotels to become more competitive.

The issues relating to converting existing stock in historic regional city centres is also contributing to the rise of smaller formats and pod hotels. These buildings may not have the floor plates necessary for large traditional rooms. However, Savills does caution that smaller format and pod hotels may struggle to meet the star rating of a traditional hotel. The smaller size may mean that brands have to provide excellent communal facilities and services in order to maintain rates.

Marie Hickey, associate director of research at Savills, said: “Star ratings can be subjective but smaller formats and pods introduce a new element that the industry will have to decide how to adapt to and rate. Whilst we don’t expect them to replace traditional hotels, for some visitors size really does matter, but ultimately they will provide greater consumer choice to overnight visitors.”

Pod concepts work best in locations where visitors don’t necessarily plan to spend a lot of time in their room. It will therefore not be a trend for all regional locations but will be limited to those with a significant number of tourist attractions to draw guests out of their rooms, such as Bath, Oxford and Edinburgh and business visitors.

Hickey said: “What these regional pod hotels will offer guests is a central location at a smaller price, two strong motivators to give up that extra bit of space. Improved technology and construction innovations such as flat screen tv’s and improved storage will also mean that the small space will begin to feel less and less like a sacrifice.” 

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