Why Are So Many Sports Venues Developing Hotels?
SEPTEMBER 24, 2007. Hotels are a hot topic at sports venues. As top sports venues seek to leverage their assets more effectively, they are exploring new business opportunities and investing in extensive modernisation and ambitious redevelopment schemes, many of which include hotels.
This could be considered a natural development of the business they operate. By adding purpose-built state-of-the-art conference and banqueting ('C&B') and leisure facilities, including integrated hotels on site, venues can develop and leverage corporate hospitality sales and conference business. In addition hotels can enable them to tap into the growing short breaks leisure market.
PricewaterhouseCoopers' research shows that hotels at sports venues are a relatively new phenomenon and remain fairly uncommon with around 1,300 rooms open at 11 hotels at major sports venues by the end of 2007. However rooms could more than treble in the future with plans for a further 3,500 rooms at 28 hotels across a range of sports venues. If all the planned rooms are developed, then hotel rooms at venues (existing and pipeline) could account for 2 per cent of chain affiliated rooms in the UK. If we then compare the penetration of existing and pipeline hotel development at the main UK sports grounds we see hotel penetration could range from 4 per cent of rugby grounds to 16 per cent of racecourses.
As sports venues are becoming bigger, better and more diversified so the opportunities to develop hotels in the future are likely to increase. This could result in hotels that are integrated with spectator facilities and the introduction of new lodging products such as extended stay hotels and new brands such as Hilton Garden Inn. For developers competing for a scarcity of good sites, sports venues could represent an interesting opportunity. Taking racecourses as an example, 16 per cent have stated that they are planning or opening hotels. However, this still leaves 84 per cent of the UK's major racecourses without hotel plans.
If this niche sector continues to grow there is potential to bring benefits to the hotel market, sports venue and local economy, providing the market remains benign and the business model works for both the sports venue and hotel operator.
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