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CAMBRIDGE, UNITED KINGDOM
HOTEL PROPERTY SECTOR
MARKET REVIEW
CAMBRIDGE TOURISM MARKET
Overseas residents made 9.2 million visits to the UK in
the three months to December 2016. This was 6% higher
than the same three months in 2015. The total number of
inbound tourist visits to the UK in 2016 grew yoy by 3% to a
record 37.3 million, representing a further year of continued
growth, which has been seen since 2010. The fall in the value
of the pound and the continuation of major government
initiatives (including VisitBritain’s GREAT Britain campaign)
are thought to have been contributing factors towards
this growth. Tourist numbers are forecast by VisitBritain to
continue to rise in 2017 to 38.1 million, largely due to the
favourable exchange rate, which is likely to continue to offer
good value for money. Average spend per visit was £593 in
2016 , a decrease from £609 in 2015. While average spend
per visit peaked in 2013 at £650, spending for 2016 as a
whole set a new record, at £22.2 billion.
Renowned for its history, architecture and cultural appeal,
the city of Cambridge is a popular destination for both
domestic and overseas visitors. Described as one of the
'most beautiful cities in the world' by Forbes, tourism
generated £350 million for the city’s economy in 2015.
The city of Cambridge witnessed 430,000 visitors in 2015
(the most recent full year data available), making it the 10th
most visited city in the UK. This was a 3% increase on the
previous year.
Research from the Office for National Statistics (ONS)
suggests that average spend per visit was £814 in 2015,
a marked increase compared to £727 per visit achieved
in 2014. This was 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 the
International Passenger Survey by the Office for National
Statistics in 2015, 33% of staying visitors were visiting friends
or relatives, 29% were on business trips and 25% were
on holiday.
HOTEL MARKET PERFORMANCE
Cambridge is a strong performing hotel market relative to
the UK as a whole. Occupancy fell 1% in 2016, however it
remains at 78% and is therefore ranked 15th in the market.
In 2016 Cambridge achieved an average room rate (ARR) of
£90.41, a 4% rise on the previous year and is amongst the
highest of any UK market outside of London. As a result of
the increase in ARR, revenue per available room (RevPAR)
within the city experienced continued growth to £71.90,
an increase of 3% yoy, but a lower rate of growth than has
been seen previously (Cambridge saw RevPAR grow by
circa 10% annually between 2012 and 2014, and by 7% 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 attractions.
EXISTING AND FUTURE SUPPLY
As at February 2017, there were 32 hotels within the city
comprising 2,451 bedrooms. The number of hotel bedrooms
within Cambridge has increase by circa 29% in the last five
years, with 571 bedrooms being added over this period.
Specifically, there has been a steady increase in branded
budget hotel supply located on the outskirts of Cambridge
city centre, with the most recent being the opening of the
Hotel Ibis Cambridge Central Station which totals 231
bedrooms. The most recent new entrant to the full service
market within Cambridge city centre was the 48-bedroom
Varsity Hotel and Spa which opened in 2010.
The average size of hotels in the city is 77 bedrooms, which
is larger than the average in England of 48 bedrooms.
Travelodge, a budget hotel operator, occupies the largest
proportion of supply with circa 20% of the bed stock within
the city. Premier inn, also a budget hotel operator, occupies
12% of the total hotel stock. The largest hotel in the city is
the Hotel Ibis Cambridge Central Station which offers 231
bedrooms. Approximately 27% of the city’s hotel stock is
unbranded. There are seven 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 there are a total of 1,166 bedrooms in
the hotel pipeline, distributed between 16 hotels. 21% of
these bedrooms are due to be delivered in 2017, and the
remainder are either speculative or on hold. We are aware
that the pipeline due for completion this year comprises
three hotels, two of which are extensions to existing hotels.
The 4-star DoubleTree by Hilton Hotel Cambridge is due
to be extended by 16 bedrooms, and the 4-star University
Arms is being extended by 73 bedrooms. The Tamburlaine is
a new 4-star 155 bedroom full service hotel which will open
on 1 April 2017. The hotel benefits from a good location on
Station Road, adjacent to Cambridge Railway Station.
Brookgate and its development partners Network Rail
and DB Schneker are planning to create a new 36-acre
business quarter with a hotel around a new railway station at
Cambridge North, which is expected to open in May 2017.
Pre-planning discussions have been held with Cambridge
City Council regarding the CB4 scheme, which has been
designed by Formation Architects and would include offices,
residential apartments, restaurants and shops. Brookgate is
currently developing the CB1 mixed-use scheme around the
main railway station in central Cambridge, including the 231-
bed Hotel Ibis Cambridge Central Station, which opened in
September 2016.
HOTEL MARKET OUTLOOK
In light of the strong corporate and leisure-related demand,
coupled with the weak pound, it is expected that occupancy
levels and ARR will continue to remain robust within the city
in the medium term. Cambridge’s proximity to London and
its pool of highly skilled labour continues to attract a large
number of science and technology firms, which continues
to bolster hotel performance in the city. Specifically, the
completion of AstraZeneca’s headquarters within the city
(expected in 2017) is expected to further enhance corporate
demand. 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.
As of 1 March 2017
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Annual Report 2016
MARKET REVIEW