MARKET REVIEW
CAMBRIDGE, UNITED KINGDOM
HOTEL PROPERTY SECTOR
as of 1 March 2016
MARKET REVIEW
CAMBRIDGE TOURISM MARKET
The number of inbound tourist visits to the UK in 2015
reached a record 35.8 million, after several years of growth
since 2010. Major sporting events such as the London
Olympics, additional flight routes andmajor government and
public body initiatives, including VisitBritain’s GREAT Britain
campaign, are all thought to have been contributing factors
towards the growth witnessed in recent years. Average
spend per visit was £609 in 2015, which remains positive
following the peak of £650 per visit in 2013, reflecting the
relative weakness of sterling leading up to 2013. In 2015,
UK visit levels were 4% higher than the 2014 inbound tourist
visits of 34.4 million.
Renowned for its history, architecture and cultural appeal, the
city of Cambridge is popular destination for both domestic
and overseas visitors. Described as one of the "most
beautiful cities in the world" by Forbes, tourism generates
over £350 million for the city’s economy. According to the
Cities Outlook 2014 the city is the innovation capital of the
country, with more patents per 100,000 population than the
next six cities combined. The city of Cambridge witnessed
418,000 visitors in 2014, making it the 10
th
most visited city in
the UK. This represented a 3% increase on the previous year.
According to data from the Office for National Statistics, the
city hosted a total of 3.7 million visitor nights in 2014. The
average length of stay in the city was nine nights, which is
higher than the majority of UK markets.
Research from the Office for National Statistics (ONS)
suggests that average spend per visit was £727 in 2014,
which is the highest of any major city in the UK. Similarly,
according to research by Tripadvisor in 2014, Cambridge is
the second most expensive UK city to visit, after Edinburgh
and ahead of London. According to research by Tourism
South East Research, 47% of staying visitors were on holiday,
15% were on visits to friends and relatives and 33% were
on business trips. In 2014, the key international tourism
contributors to Cambridge included France (54,000 visitors),
Germany (43,000), USA (39,000), Netherlands (24,000) and
Spain (24,000).
HOTEL MARKET PERFORMANCE
Cambridge is one of the best performing hotel markets
in the UK. Occupancy fell by 3% in 2015 but remains at
around 80%, well in excess of the national average. In 2015,
Cambridge achieved ARR of £118, which was a 4% increase
on the previous year. The ARR achieved by the Cambridge
market is amongst the highest of any UK market outside
of London. Resultantly, RevPAR within the city, which has
increased by circa 10% over the last three years, showed
a witnessed a marginal improvement in 2015. The strong
performance achieved by Cambridge hotels is primarily
underpinned by strong corporate and leisure-related
demand, fuelled by the significant number of technology and
science-related organisations in the Cambridgeshire area
and the variety of heritage and cultural tourist attractions.
EXISTING AND FUTURE SUPPLY
As at February 2016, there were 35 hotels within the city,
comprising 2,279 bedrooms. This equates to 55 inhabitants
per available hotel room. This is lower than the UK average
of 105 inhabitants per hotel bedroom but reflects the high
number of visitors to the city. The number of hotel bedrooms
within Cambridge has increased by circa 27.5% over the last
five years, with 540 bedrooms being added during this time.
Specifically, there has been a steady increase in branded
budget hotel supply located on the outskirts of Cambridge
city centre, with the opening of two Premier Inn and two
Travelodge hotels totalling 531 bedrooms (the most recent
being the 219-bedroom Travelodge Cambridge Newmarket
Road in 2013). The only new entrant to the full-service
market within the Cambridge city centre has been the
48-bedroom Varsity Hotel and Spa which opened in 2010.
The average size of hotel in the city is 65 bedrooms,
which is larger than the UK average of 47 bedrooms.
Travelodge, a budget hotel operator, occupy the largest
proportion of supply with over 20% of the bed stock within
the city. The largest hotel within the city is the Travelodge
Cambridge Newmarket Road which offers 219 bedrooms.
Approximately 31% of the city’s hotel stock is unbranded,
which is marginally higher than the national average. There
are seven upper upscale hotels within the city, the largest
of which is the Hilton Cambridge City Centre offering
198 bedrooms. There are currently no 5-star hotels within
the city.
In terms of new supply within Cambridge city centre, we
are aware that the 231 bedroom Hotel Ibis located close to
Cambridge train station is due to open in August 2016. In
addition we are aware of three full service hotels which are
due to open in 2017. These include an as yet unbranded
4-star hotel close, also close to Cambridge train station,
a Crowne Plaza close to Addenbrooke Hospital and the
re-opening of the University Arms Hotel. The University
Arms Hotel was closed in 2014 for a major refurbishment
and 71-bed extension.
HOTEL MARKET OUTLOOK
In light of the strong corporate and leisure-related
demand, coupled with a general undersupply of serviced
accommodation in the area, it is expected that occupancy
levels and ARR will continue to remain robust within the
city in the medium term. Specifically, the completion of
AstraZeneca’s headquarters within the city (expected in
end 2016) is expected to further enhance corporate
demand within the city. Similarly, the city’s hotel market is
expected to benefit from the recently announced Greater
Cambridge City Deal (signed in June 2014) by which the
city is to receive circa £100 million of public investment for
infrastructure projects between 2015 and 2020.
35
Annual Report 2015
