Leos Luton Development Limited March 2021
Hotel Need Assessment
Cresta House, 8 Alma Street, Luton LU1 2PL f Final Report
savills.co.uk
Hotel Need Assessment Cresta House, 8 Alma Street, Luton LU1 2PL
Contents Executive Summary 1 1. Introduction 1 2. The Site and Proposal 2 3. Policy and Research 4 4. Defining the Study Area 8 5. Current Luton Hotel Supply 10 6. Luton Hotel Demand Drivers 18 7. Economic Benefits 37 8. Conclusion: Demand / Supply Balance 39
Leos Luton Development Limited March 2021
Hotel Need Assessment Cresta House, 8 Alma Street, Luton LU1 2PL
Executive Summary
This report provides a hotel needs assessment to help demonstrate the conversion of part of Cresta House for a 20- bedroom hotel is supported by adequate demand.
Before investigating the key demand drivers for hotels in Luton, the report first considers existing and future hotel supply. The majority of Luton’s existing hotel bedrooms (85%) are located outside of the town centre despite hotels being considered a town centre use within the National Planning Policy Framework (NPPF). The Proposed Development will help arrest this imbalance by bringing new hotel investment into the town centre.
The majority (72%) of Luton’s existing hotels provide other onsite facilities such a restaurants, gym and leisure facilities, business services etc. The provision of onsite facilities is aimed at hotels retaining as much of their visitor’s expenditure as possible rather than using outside food and beverage and leisure facilities. In effect the hotels with onsite facilities compete with the town centre for visitor expenditure. The Proposed Development on the other hand does not include onsite facilities, meaning visitors will be encouraged to spend money in the town centre.
As a result of the proliferation of ‘out of centre’ hotels, Luton town centre has fewer hotel bedrooms per town centre floorspace (ie retail, office, hospitality and leisure) compared to Milton Keynes and St Albans town centres. It also has a much lower proportion of its total hotel bedrooms located within town centres (15%) compared to St Albans (27%) and Milton Keynes (33%).
While we accept the conclusions of the Luton Hotel Study in 2015, namely the majority of hotel demand in Luton emanates from growth at London Luton Airport, it not the only hotel demand driver. Like passenger growth at the airport, many of the other demand drivers have been trending upwards before the onset of Covid 19 pandemic.
While the pandemic has had an unprecedented impact on the UK and global tourism and visitor economy, Savills expect the hotel market to have recovered by the end of 2022 provided there are no further rampant Covid strains or a material and sustained stock market correction. Responses to various sentiment surveys point towards a willingness to return to regular travel soon after the threat of the virus has been removed. For example, the latest IATA (International Air Transport Association) travel survey asked respondents when they would feel comfortable travelling regularly again, with a promising 80% suggesting this would happen within six months of the pandemic subsiding. This suggests the pent-up appetite to travel, when possible to do so, remains strong for the vast majority.
A summary of the key demand drivers supporting the need for the Proposed Development include: . Hotel Occupancy: In terms of demand for hotel accommodation in Luton, average hotel occupancy in Luton has averaged 76% between 2015-2019. The industry benchmark for when demand exceeds supply is 70%. This is despite the UK economy growing less quickly over this period with year on year GDP growth softening from 2.4% in 2015 to 1.4% in 2019 and over 450 rooms being added to Luton’s hotel supply since 2015. . Housing growth: Luton has experienced strong housing growth, with a 4% increase in the number of dwellings since the publication of Luton Council’s Hotel Study in 2015, as well as the number of housing deliveries consistently exceeding the housing target between 2017 and 2020. Furthermore, the number of households in Luton is projected to grow 7.6% between 2019 and 2029. This could lead to more people coming to Luton in order to visit family and friends and thus increase demand for hotel accommodation.
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Hotel Need Assessment Cresta House, 8 Alma Street, Luton LU1 2PL
. Business and job growth: Between 2015 and 2019, there has been an increase of 4,000 people in employment in Luton, which equates to a 4% increase in Luton’s workforce. Luton’s Accommodation and Food Service Activities sector employed 4,500 people in 2015 which has increased to 5,000 people in 2019, signifying an 11% increase in the number of employees in this sector. Strong business and job growth will continue to drive corporate demand for hotel accommodation in Luton. . Tourism: in terms of domestic tourism, since the publication of the Luton Hotel Study the number of domestic visits to Luton has increased by 9% and the number of domestic nights in Luton has increased by 54%. International tourism to Luton has increased by 34% since the 2015 Study. This equates to Luton experiencing a 7% annual growth rate, outstripping the UK’s annual average growth rate of 3%. These factors point to strong demand for hotel accommodation in Luton. . Weddings and corporate demand: due to the accessibility to the airport, Luton accommodates strong demand for residential conferences and weddings. There are a number of wedding and conference venues located in the town centre which do not offer onsite accommodation. Therefore, the Proposed Development could offer affordable accommodation to serve those attending weddings and residential conferences, with good transport links and amenities nearby. . Town centre regeneration: regeneration projects at St George’s Square, the Hat District, and Luton FC’s stadium at Power Court are likely to make Luton town centre a more attractive destination and aim to grow the number of visitors. Currently, up to 1,500 seats are allocated to away fans at the current Kenilworth Stadium, equating to 14% of seat capacity. Assuming this proportion remains the same, the new stadium at Power Court could accommodate between 2,535 (with 17,500 seat capacity) and 3,331 (with 23,000 seat capacity) away fans, many of whom may require hotel accommodation located nearby to the stadium in the town centre on match days. Therefore, the Proposed Development could cater to this demand, being well- located in the town centre and less than 1km from the proposed new stadium at Power Court. . Visitor attractions: Luton has a number of visitor attractions, such as the Luton International Carnival, Luton Mela, Stockwood Park and Discovery Centre, Wardown House, Museum and Gallery, and the Hat District which attract many visitors who may also be seeking hotel accommodation. . London Luton Airport: In 2019, Luton Airport was the 5th busiest airport in the UK by passenger numbers and served approximately 18 million passengers. It is one of the fastest growing major London airports. It has grown steadily over the past 20 years and has recently experienced 10 years of successive growth between 2010 and 2019. During this period, passenger numbers increased from approximately 8.7 million passengers per annum (mppa) to 18 mppa (circa 109% increase), averaging to 9% annual growth. The 18 mppa has been reached 11 years before the 2030 estimate used in the Hotel Study. It is anticipated that the airport will recover swiftly from the temporary implications of COVID-19 for travel restrictions, having been the second busiest airport in the UK by passenger numbers during the restrictions (e.g. May and June 2020) after Heathrow. The airport secured planning permission for expansion in 2014 and is currently seeking approval to increase its passenger cap from 18 mppa to 19 mppa. Growth in passenger numbers for Luton airport has been much stronger than the forecasts used in the Hotel Study (where it is assumed that most demand will be airport-driven). This suggests that future demand for hotel accommodation in Luton will be much higher than anticipated in the Luton Hotel Study, which would likely lead to higher estimates for the number of hotel rooms required in Luton.
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Hotel Need Assessment Cresta House, 8 Alma Street, Luton LU1 2PL
1. Introduction
1.1. Purpose
1.1.1. Savills Economics has been instructed by Leos Luton Development Limited to provide a hotel needs assessment to support a planning application for a 20-room hotel at Cresta House, 8 Alma Street, Luton LU1 2PL.
1.1.2. The subject site is located within the Luton Town Centre meaning a sequential assessment is not required under national policy.
1.2. Methodology
1.2.1. The report methodology is detailed below –
. Section 2 – Describes the application site and the Proposed Development; . Section 3 – Provides a high level review of the local and national policy context pertaining to hotel provision including a review of the Luton Hotel Study (2015); . Section 4 – Defines the study area within which we focus the analysis of hotel supply and demand; . Section 5 – Updates the current hotel supply in Luton since the Luton Hotel Study was published in 2015 and benchmarks Luton’s hotel provision against nearby town centre locations; . Section 6 – Updates the key demand divers since the publications of the Luton Hotel Study (2015) that supports the need for the Proposed Development; . Section 7 – Outlines the economic benefits the Proposed Development will bring to Luton generally and town centre specifically; and . Section 8 – Concludes the report by drawing key conclusions as to the hotel supply / demand balance in Luton and subsequent need for the Proposed Development.
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Hotel Need Assessment Cresta House, 8 Alma Street, Luton LU1 2PL
2. The Site and Proposal
2.1. Site
2.1.1. The site is situated in the centre of Luton, located at the western side of Alma Street, at the junction of New Bedford Road. The site comprises an 8 storey (lower ground through to sixth floor), 1960s mixed- use building. Commercial uses are found on the ground and mezzanine floors with recently permitted self-contained residential dwellings across all the upper floors of the existing building.
2.1.2. The existing commercial spaces comprises the Co-Operative Bank (Units 2-6, Use Class E) and other varied retail units (Units 1 (vacant), 1A (vacant), 3 and 7 (vacant), now Use Class E). Each have individual access from the ground floor and internal stair access to the mezzanine levels above.
2.1.3. The site benefits from good pedestrian and cycle links to New Bedford Road, Luton Town Centre, and the main retail district. It is approximately 100m from The Galaxy (leisure and entertainment complex), 160m from the Town Hall square, and 140m from ‘The Mall’. Luton Train Station is located 350m to the north east within the St. Georges district of Luton’s Town Centre, providing links to London and large employment centres such as Stevenage, Milton Keynes, St. Albans and Hemel Hempstead.
2.2. Proposed Development
2.2.1. The Proposed Development involves the change of use of a number of existing commercial units (Units 1, 1A, 2-6, 3 and 7 fall under Use Class E) across the ground and mezzanine floors of Cresta House into a 20 room hotel (Use Class C1).
2.2.2. The total hotel area would be 557sqm Gross Internal Area (GIA) comprising the rooms, circulation spaces, services and employee areas. This is summarised in Table 2.1.
Table 2.1 Proposed Hotel Area Schedule (all areas in sqm GIA) Hotel Rooms Circulation Services Employee Areas Total
Ground 215.74 66.34 58.39 25.26 365.73
Mezzanine 157.47 31 2.8 - 178.8
Total 373.21 97.34 61.19 25.26 557
Source: Savills (2021)
2.2.3. Discussions with hotel operators are still ongoing, but it is intended that it would be developed as a unique and individual styled boutique hotel with competitively priced room rates for guests. The rooms would vary in size, from single to quadruple rooms, in order to cater for visiting individual, groups, and/or families.
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Hotel Need Assessment Cresta House, 8 Alma Street, Luton LU1 2PL
2.2.4. The Proposed Development would amalgamate the existing commercial units, with an entrance/reception along the Alma Street frontage and stair access to the upper floor level. The hotel will also comprise independent refuse/recycling storage facilities, laundry and storage facilities as well as employee office, canteen, and toilet facilities, all of which are proposed on the ground floor. A dedicated service access doorway is proposed near the street corner, that will provide direct servicing access from the street to the refuse/recycling and laundry facilities without conflicting with the hotel entry or guest rooms.
2.2.5. The hotel entrance, and all areas and rooms on the ground floor will be step-free. Additionally two of the lower ground double rooms will also be designed to meet the Building Regulations Category M4(3) Wheelchair Accessible Design standards, including accessible toilet facilities within each of these rooms. Two of the existing on-site car parking spaces within Cresta House could be dedicated accessible parking spaces. Table 2.2 sets out the hotel room accommodation schedule.
Table 2.2 Hotel Room Accommodation Schedule Single Double Triple Quadruple Total
Ground 4 5* 2 - 11
Mezzanine 3 1 4 1 9
Total 7 6 6 1 20
Source: Savills (2021); *Includes 2 wheelchair accessible rooms
2.2.6. The Proposed Development will support Luton’s visitor economy, especially the localised economy of the town centre. Unlike the majority of existing hotels, the Proposed Development will not provide onsite facilitates such as restaurants, leisure and business facilities meaning visitors to the hotel will be encouraged to spend money within the town centre. It will also help attract much needed new hotel investment to the town centre. Despite hotels being defined as a town centre use in national policy, the majority of hotels in Luton are in ‘out of centre’ locations serving growth at London Luton Airport. We discuss these issues further within Section 5 of this report.
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Hotel Need Assessment Cresta House, 8 Alma Street, Luton LU1 2PL
3. Policy and Research
3.1. National Policy
3.1.1. The revised National Planning Policy Framework (NPPF) was updated on 19th February 2019 and sets out the government’s planning policies for England. It confirms that hotels are a main town centre use.
3.1.2. One of the key aims of the NPPF is to ensure the vitality of town centres. Paragraph 85 states that planning policies should take a positive approach to the growth, management and adaptation of town centres. This includes by allowing them to grow and diversifying in a way that can respond to rapid changes in the retail and leisure industries.
3.1.3. It goes on to state that local planning authorities should allocate a range of suitable sites to meet the scale and type of retail, leisure, commercial, office, tourism, cultural, community and residential development needed in town centres looking at least ten years ahead.
3.1.4. To secure vital and viable town centres, the NPPF requires that a sequential approach is adopted, as outlined in Paragraph 86. Facilities such as hotels should be provided within or on the edge of town centres where good accessibility, co-location and diversity support healthy town centres.
3.1.5. The Proposed Development is located within the Luton Town Centre meaning a sequential assessment is not required. This report provides a needs assessment to demonstrate there is sufficient demand to support the Proposed Development.
3.2. Local Policy
3.2.1. The Luton Local Plan 2011 – 2031 (LLP), adopted November 2017, is a strategic document setting out the vision, objectives and spatial planning strategy for the whole of Luton Borough Council’s area for the period up to 2031.
3.2.2. Paragraph 4.30 of the Luton Local Plan provides that the preferred policy approach for Luton Town Centre is to focus on the regeneration of key sites and enhancement of heritage assets and the historic environment to deliver new housing, retail, creative and traditional businesses, culture and leisure uses within the historic urban fabric of the town centre. Within the Town Centre, such uses will be appropriate alongside proposals for creative businesses, art and education, building on the existing strengths and distinctive character of the area. Land will be used efficiently within the town centre so that development can contribute substantially to the delivery of the growth identified for the future and to the creation of a vibrant and competitive environment.
3.2.3. The Luton Local Plan defers to the NPPF when defining ‘main town centre uses’. Hotels (Use Class C1) are specifically identified as a ‘main town centre use’ in the NPPF (and thereby the Local Plan) for their contribution to the vitality and viability of town centres in tourism development; providing accommodation for visitors and allowing them to stay in the town centre and contribute to the local economy as part of their stay.
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Hotel Need Assessment Cresta House, 8 Alma Street, Luton LU1 2PL
3.2.4. The Luton Hotel Study (July 2015), discussed in more detail in the next section, sets out the additional demand for hotel facilities and rooms in Luton. This is carried into Local Plan Policy LLP3 (Luton Town Centre Strategy) and paragraph 4.29 which sets out there is a need for an extra hotel room requirement of 1,030 rooms by 2020, growing to potentially 1,830 by 2030 predominantly related to aviation and business travel in the vicinity of London Luton Airport. Policy LLP3 further provides that development proposals within the town centre should contribute to job creation as well as provide 30,096sqm of hotel and leisure uses by 2025 to maintain and enhance the retail and regional role of the town centre.
3.2.5. Local Plan Policy LLP13 (Economic Strategy) sets out that planning applications will be granted where they deliver sustainable economic growth and prosperity to serve the needs of Luton and the wider sub region. Jobs will be generated through business and industry development on strategic employment allocations, and within the existing key employment areas safeguarded for (former) B class uses. The policy goes on to require that further growth in employment in commercial and service related industries including retail, leisure, culture and tourism will be generated within the Town Centre, District and Neighbourhood Centres including where ancillary or proposed within the strategic employment allocations (our emphasis).
3.2.6. Part E of Policy LLP13 goes on to require that planning permission for proposals that would increase and improve tourism and visitor attractions will be granted, provided that it does not cause an adverse impact on the road network, any town centre use accords with the sequential approach and is in conformity with other policies in the Local Plan. Any future application would seek to justify the proposed hotel use.
3.2.7. As discussed, the Proposed Development is located within the Luton Town Centre meaning a sequential assessment is not required. This report provides a needs assessment to demonstrate there is sufficient demand to support the Proposed Development.
3.3. Local evidence base
3.3.1. The Luton Hotel Study (July 2015) is the Council’s primary evidence base informing the Council’s policy in steering future hotel development. The study assesses the potential for new hotels across low growth and high growth scenarios.
3.3.2. At the time of the Study, Luton had an existing supply of 20 hotels, mostly rated 2 to 3 stars. The Study noted that hotel stock increased by 13% since 2005, with 10 new hotels opening in Luton. The majority of hotel stock was found to be located outside of Luton Town Centre, with almost half of hotels located outside the Town Centre being situated within close proximity of London Luton Airport. At the time of the Study, most planning permissions for new hotels were situated near the airport.
3.3.3. The Luton hotel market is dominated by airport-related demand. The Study notes that the level of future requirements would be directly linked with the economy and the delivery of the London Luton Airport expansion scheme.
3.3.4. The Study identified the following as demand drivers for hotels in Luton:
. London Luton Airport: due to strong growth in passenger numbers, the plans for expansion of the Airport, and demand from aircrew stopovers.
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Hotel Need Assessment Cresta House, 8 Alma Street, Luton LU1 2PL
. Visitors to Luton: according to Visit Britain data, the majority of visitors to Luton were visiting friends and relatives, followed by those travelling for business purposes (with business visits increasing) . Asian wedding market and conferences: due to accessibility to London Luton Airport, Luton was found to accommodate great demand for conferences and weddings. The Study identified Putteridge Bury, Venue Central and Luton Hoo Hotel as major venues for Asian weddings, driving demand for hotel accommodation in Luton. Furthermore, the lack of supply of wedding venues to accommodate large Asian weddings in Luton (due to the Council refusing applications for new venues because of concerns of loss of employment land) also leads to higher demand for hotel accommodation. The majority of hotels reported receiving 1 to 5 bookings for wedding or conferences per week. . Corporate demand: based on a survey conducted in the Study, the airport was found to be the main source of midweek demand for most hotels in Luton, accounting for 50-95% of hotels’ weekly trade . Airline contracts: the Study identified demand for hotel space for aircrews, management and administration working at London Luton Airport. The Study found that demand tended to exceed hotel bedroom supply in Luton, with EasyJet having to use hotels in Hemel Hempstead, Hatfield and Dunstable
3.3.5. The survey of Luton hotels undertaken for the Study outlines the reasons for staying at Luton hotels, with the majority (46%) of visitors staying for business purposes, followed by those on a stopover (31%), those staying for leisure purposes (10%), those attending an Asian wedding (7%), and other purposes (6%).
3.3.6. In terms of denied business, the survey found that hotels located near the airport denied the most business on a weekly basis (an average of 50 bookings a week), with hotels in the Town Centre denying on average between 11 and 20 bookings a week.
3.3.7. The Study assesses the net hotel bedroom requirement for low and high growth scenarios, as presented in Table 3.1 below. In the low growth scenario, the Study forecasts demand for 83 rooms by 2020 and 1,030 rooms by 2030. For the high growth scenario, the Study forecasts demand for 1,024 rooms by 2020 and 1,829 rooms by 2030.
Table 3.1 Net Hotel Room Requirement in Luton by 2020 and 2030 Room Requirement – Low Room Requirement – High Year Growth Growth 2020 83 1,024 2030 1,030 1,829 Source: WYG (2015) – Luton Hotel Study Update
3.3.8. The Study concludes that existing demand in Luton exceeds the current supply of hotel rooms. As demand is located near the airport, and the Study anticipates that there would be less interest for hotel space in the town centre, it states that there would be limited need to allocate more hotel sites in the town centre.
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Hotel Need Assessment Cresta House, 8 Alma Street, Luton LU1 2PL
3.3.9. Through generic discussions with the Council regarding hotels (and as noted in a recent committee report dated 30 September 2020 ref: 20/00646/FUL for a hotel outside of a town centre) we understand that officers consider the aforementioned Luton Hotel Study’s assumptions were met earlier than anticipated because the number of passengers using the airport have grown at a greater rate than was projected within the study. In that committee report, officers considered that the Luton Hotel Study was therefore out of date, but officers considered a submitted needs assessment (from that applicant) regarding hotel rooms which demonstrated there remains a net demand for hotel rooms.
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Hotel Need Assessment Cresta House, 8 Alma Street, Luton LU1 2PL
4. Defining the Study Area
4.1. Introduction
4.1.1. The study area within which we have analysed hotel need is Luton Local Authority District, shown in Figure 4.1 below. This was the search area used in the Luton Hotel Study (2015) which informed the current Local Plan.
Figure 4.1 Luton Borough Council
Source: Savills (2021)
4.2. Luton and its strategic context
4.2.1. Luton is a densely populated town to the north west of London, surrounded by the Green Belt and situated within the Chilterns. Other than Greater London, the nearest large employment centres are Stevenage, Milton Keynes, St. Albans and Hemel Hempstead. Luton also lies in the South East Midlands Local Enterprise Partnership (SEMLEP) area.
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Hotel Need Assessment Cresta House, 8 Alma Street, Luton LU1 2PL
4.2.2. The town benefits from good strategic north-south access to the Midlands and Greater London (via the M1 and Midlands Mainline Railway) and is also served by the fast-growing London Luton Airport and adjacent high quality business parks.
4.2.3. The Local Plan notes that there has been significant investment in civic spaces and transport infrastructure around the town centre and key regeneration sites. For example, St George’s Square in the town centre was redeveloped in 2007, and the Luton-Dunstable Busway, a high-quality service linking Houghton Regis, Dunstable and Luton, was opened in 2014.
4.2.4. In the past, Luton has provided access to relatively lower cost housing compared with surrounding areas. However, in recent years there has been significant demand to accommodate a growing population (existing households and people moving into the area). Due to the lack of greenfield land to build sufficient housing and low development values within the town, the market has been unable to deliver affordable housing, except through Council intervention.
4.2.5. There is a significant economic growth multiplier for Luton and the wider sub-region, attributed to London Luton Airport, which provides a range of aviation-related skilled engineering and technical employment, as well lower-skilled work related to aviation and business services.
4.2.6. The Local Plan states that Luton town centre is performing well for shopping and access, but that the town centre must expand its retail offer to remain competitive with sub-regional neighbours and national retailing trends. By expanding the town centre into Power Court (discussed further in Section 6 with the relocation of Luton FC’s football stadium), taking advantage of the Luton-Dunstable busway, town station improvement and inner ring road improvements, the town centre can be regenerated and remain competitive.
4.2.7. The Proposed Development will assist with the above Local Plan objectives by increasing the number of hotel room in the town centre and by doing so help attract and retain new visitor spend within the town centre.
4.3. Transport and communications
4.3.1. Luton is served by junctions 10, 10a and 11 of the M1 motorway, linking it with London, Milton Keynes and the Midlands. The M25 is located 10 km away to the south which provides links to other parts of the South East. The A505 links Luton to Dunstable and Stevenage and the A6 links it to Bedford. London Luton Airport lies within the borough boundary and has a range of scheduled flights to business destinations as well as chartered flights, business aviation and air freight services. Significant expansion is planned for the Airport – this is discussed further in Section 6.
4.3.2. The Luton Direct Air-Rail Transit (DART) is currently due to open in 2022, transferring passengers between the airport terminal and Luton Airport Parkway station in under 4 minutes1. This will reduce the travel time between the airport and London St Pancras to 30 minutes2.
1 https://dart.llal.org.uk/ 2 Ibid.
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Hotel Need Assessment Cresta House, 8 Alma Street, Luton LU1 2PL
5. Current Luton Hotel Supply
5.1. Existing hotel provision
5.1.1. Luton has 25 existing hotels as detailed in Figure 5.1 below.
Figure 5.1 Luton’s Existing Hotel Supply
Source: AMPM, Savills 2021
5.1.2. From Table 5.1, it can be seen that only 6 (or 24%) of these hotels are located within the Luton Town Centre. This is considered to be an extremely low proportion given hotels are regarded as a town centre use by the NPPF. The proportion of hotel facilities in the town centre is even lower when considered on a per bedroom basis. Based on this metric only 15% of Luton’s hotel bedrooms are located within the town centre. The Proposed Development will bring new hotel investment into the town centre and in doing so will help arrest the imbalance between ‘in centre’ and ‘out of centre’ hotels in Luton.
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Hotel Need Assessment Cresta House, 8 Alma Street, Luton LU1 2PL
Table 5.1 Supply of Existing Hotels in Luton % of Total Hotel No. of Hotel % of Total Location No. of Hotels Supply Bedroom Bedroom Supply
Town Centre 6 24% 347 15%
Out of Centre 19 76% 1,909 85%
Edge of Town Centre 5 20% 238 11%
Airport 7 28% 1,185 53%
Outside 7 28% 486 22%
Grand Total 25 100% 2,256 100%
Source: Savills (2021); AMPM (2021)
5.1.3. Many of the larger ‘out of centre’ hotels are orientated towards serving London Luton Airport including -
. Courtyard – 250 bedrooms . Hampton by Hilton – 188 bedrooms . Holiday Inn Express – 154 bedrooms . Holiday Inn – 124 bedrooms . ibis budget – 134 bedrooms . ibis – 162 bedrooms . Premier Inn – 173 bedrooms
5.1.4. The growth of ‘out of centre’ airport hotels in Luton is in response to the strong growth in passenger numbers at London Luton Airport, serving 18 million passengers per annum (mppa) in 2019, 11 years ahead of the original estimate of 18 mppa by 2030. It has grown steadily over the past 20 years and has recently experienced 10 years of successive growth between 2010 and 2019. London Luton Airport is located 2.6 km to the east of Luton Centre. While the Coronavirus Pandemic has had a devastating impact on domestic and international air travel, passenger numbers are predicted to recover swiftly as the global vaccination programme continues to be rolled out. This is discussed further in Section 6.
5.1.5. The average size of the ‘edge of centre’ and ‘out of centre hotels’ (including airport hotels) are also typically much larger at 100 bedrooms compared with 58 rooms within the town centre. The airport- orientated hotels are the largest with an average size of 169 rooms.
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Hotel Need Assessment Cresta House, 8 Alma Street, Luton LU1 2PL
5.1.6. The majority of Luton’s existing hotels, both within and outside the town centre, provide a range of onsite facilities such as restaurants. For instance 5 of the 6 (83%) town centre hotels have restaurant facilities while 68% of the ‘out of centre’ (including airport) hotels have restaurant facilities. Many of these existing hotels also have other onsite facilities such a gym and leisure facilities, business services etc. The provision of onsite facilities is aimed at hotels retaining as much of their visitor’s expenditure as possible rather than the using outside food and beverage and leisure facilities. In effect the hotels with onsite facilities compete with the town centre for visitor expenditure. The Proposed Development on the other hand does not include onsite facilities meaning visitors will be encouraged to spend money in the town centre. These and other economic benefits generated by the Proposed Development are discussed in Section 7.
5.2. Hotel Pipeline
5.2.1. There are 8 proposed hotels in the pipeline in Luton with planning permission (based on AMPM and Glenigans data) providing 1,675 bedrooms. Table 5.2 presents a summary of these developments.
Table 5.2 Luton Hotel Developments with Planning Permission Number of Address LBC Reference Development Description Project Status Hotel Rooms
Outline planning permission, with all matters reserved except for access, for mixed use development comprising: a new football stadium (Use Class D2), with ancillary stadium related facilities (including spectator and media facilities, conference rooms, catering facilities and commercial space); residential floorspace (Use Class C1); retail and food and drink (use Class A1-A5); a food store (Use Class A1) car and cycle Application permitted 550 (Up to Power Court, Luton 20/01497/AMEND parking; and associated access, highways, on 11/12/2020 12,000 sq.m) utilities, public realm, landscaping, river works and associated ancillary works and structures. Non-Material Amendment of planning permission 16/01400/OUTEIA dated 24th September 2019 to regularise minor anomalies, minor changes to the proposed location and height of residential blocks E and F and minor changes to the intended phasing of the Proposed Development.
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Conversion and change of use of upper floors of the building to 39 bedroom hotel (Use Class C1) with new entrance lobby at 15 Manchester Street, Application permitted 18/00897/FUL ground floor together with changes to the 39 Luton on 22/01/2019 front fenestration and erection of first floor rear extension to insert an enclosed lift shaft and front dormers over No 15.
Outline planning permission, with all matters reserved except for access, for mixed-use development comprising: office floorspace (Use Class B1(a); retail floorspace (Use Land Adjacent Junction Class A1); food and beverage floorspace Application permitted 10 to 10A M1 Newlands 16/01401/OUTEIA (Use Class A3-A5); leisure floorspace (Use 350 on 24/09/19 Road, Luton Class D2); a hotel (Use Class C1), car and cycle parking; and associated access, highways, utilities, public realm, landscaping, and associated ancillary works and structures.
Temporary change of use of the buildings Application permitted Manor Road, Luton 20/00498/TEMP from student accommodation to flexible 153 on 02/10/2020 hotel/student accommodation use.
Erection of a second floor extension and change of use of existing buildings for 37 bedrooms in Use Class C1 (Hotel), and an Application permitted 89-93 Park Street, Luton 19/00025/FUL 37 open Class A1 (retail)/Class B1(a) (office) at on 12/06/2019 ground floor level and associated bin and cycle storage and amenity area
Outline application for a mixed use development, residential, retail, office, storage and distribution, hotel and casino uses, new landscaping, parks and public realm, car parking, means of access, new access to Kimpton Road and other Plot 8, 9 and 10, Napier associated works. Approval of Reserved Application permitted Park Kimpton Road, 18/01229/DOC Matters, including access, appearance, 250 on 02/10/2018 Luton landscaping, layout and scale for 530 residential units on Plots 8, 9 and 10 of planning permission 13/00280/OUT dated 16th April 2015. Discharge of Condition 3 of Planning Permission 16/01340/REM dated 20th December 2016 insofar as it relates to Phase 2 of the development.
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Conversion and change of use from non- residential institutions (Class D1) to 87 bedroom hotel (Class C1) with associated Phoenix House, 2-4 Mill Application permitted 19/00465/FUL parking, disabled ramp, infill undercroft, 87 Street, Luton on 17/06/2019 landscaping, roof extension, lift room conversion and single storey rear extensions.
Mixed-use redevelopment, including Residential apartments (C3), Retail and Former Vauxhall Motors Leisure (Class A1-A5 / D2), Hotel with Application permitted Site, Kimpton Road, 16/00900/FULEIA conferencing and banqueting facilities 209 11/08/2017 Luton (Class C1), Medical Wellbeing Centre (Class D1) together with landscaping, car parking, new access and associated works.
Total 1,675
Source: AMPM, Glenigan 2021
5.2.2. Similar to the supply of existing hotels, the majority of Luton’s hotel pipeline (60% of hotel bedrooms) are proposed outside the town centre (Figure 5.2). As we have discussed elsewhere, many of these hotels, especially when providing on-site facilities, compete with the town centre for visitor expenditure. The Proposed Development will bring much needed new hotel investment into Luton Town Centre, and as we discuss in Section 7, by not providing on-site facilities will increase visitor expenditure within the town centre.
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Figure 5.2 Luton Hotel Developments with Planning Permission
Source: AMPM, Glenigans, Savills 2021
5.2.3. Table 5.3 presents Luton’s hotel supply in 2015, and the high growth scenario of the net hotel room requirement as stated in the Luton Hotel Need Assessment (2015).
Table 5.3 Luton Hotel Supply 2015 vs. High Growth Scenario for 2020 and 2030 Hotel Bedroom Supply 2020 (High Hotel Bedroom Supply 2030 (High Existing Hotel Bedrooms (2015) Growth Scenario) Growth Scenario)
1,805 2,829 (1,805+1,024) 3,634 (1,805+1,829)
Source: Luton Hotel Need Assessment, 2015
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5.2.4. Since the publication of the Hotel Study in 2015 a further 451 hotel bedrooms have been delivered bringing Luton’s current provision to 2,256 bedrooms (February 2021). This is 573 bedrooms lower than the high growth estimate for 2020. As noted above Luton has a heathy hotel pipeline equating to 1,675 bedrooms. Much of this is based on the continued growth of passenger numbers at London Luton Airport. While we expect the hotel market to recover by 2022 on the back of a rebound in domestic and international tourism (as we discuss in Section 6), part of the hotel pipeline will inevitably not come forward for development. This is a standard occurrence and not necessarily as a result of the Covid-19 pandemic. For example planning application 16/02053/FUL permitted on 1st March 2017 for the change of use from a nursing home (C2) to bed and breakfast (C1) has not come forward.
5.2.5. We also acknowledge that the Council consider the Luton Hotel Study (2015) to be out of date in accordance with recent committee report dated 30 September 2020 ref: 20/00646/FUL for a hotel outside of a town centre. Council officers consider the 2015 Study’s assumptions were met earlier than anticipated because the number of passengers using the airport have grown at a greater rate than was projected within the Study.
5.2.6. While we agree with the Council’s conclusion not all hotel demand is from the airport as we discuss as part of the demand drivers in Section 6. Also not all of the existing hotel pipeline will come forward for development meaning there is strong demand to support the need for the Proposed Development.
5.3. Supply Comparison With Other Town Centres
5.3.1. Before we move onto the demand drivers discussed in Section 6 below, we have sought to compare existing hotel supply in Luton town centre with nearby competing town centres.
5.3.2. Table 5.4 benchmarks the percentage of hotel bedrooms in Luton town centre compared with Milton Keynes and St Albans town centres. Luton has a significantly lower proportion of hotel bedrooms located in its town centre (15%) when compared with St Albans (27%), and Milton Keynes (33% - more than twice as high as Luton). This demonstrates Luton town centre is benefiting much less from hotel development than nearby town centres.
Table 5.4 Hotels and Hotel Bedrooms in Luton, St Albans, and Milton Keynes Town Centres Luton St Albans Milton Keynes
% of Hotel Bedrooms in 15% 27% 33% Town Centre
Source: Savills (2021); AMPM (2021)
5.3.3. Table 5.5 benchmarks total town centre floorspace including retail, office, hospitality and leisure uses in Luton town centre with St Albans and Milton Keynes town centres. As can be seen Luton town centre is much larger than St Albans but much smaller than Milton Keynes.
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5.3.4. Table 5.5 then compares the ratio of town centre floorspace to the number of hotel bedrooms located within each town centre. In terms of total town centre floorspace, Luton town centre has the highest proportion of town centre floorspace to the number of hotel bedrooms when compared with St Albans and Milton Keynes. Luton town centre’s ratio is 12,471 sq.ft of town centre floorspace for each hotel bedroom, compared with 8,877 sq.ft for St Albans and 9,946 sq.ft for Milton Keynes. This demonstrates Luton has a much lower number of hotel bedrooms located within its town centre, relative to its size, compared to Milton Keynes and St Albans.
Table 5.5 Town Centre Floorspace to Hotel Bedrooms in Town Centre – Luton, St Albans, Milton Keynes Town Centre Floorpsace Total Town Centre Local Authority Hotel Bedrooms in TC (sqft) / Hotel Bedroom Floorspace*(sqft) Ratio Luton 347 4,327,386 12,471 St Albans 205 1,819,710 8,877 Milton Keynes 1,113 11,070,119 9,946 Source: Savills (2021); AMPM (2021): CoStar (2021) *Total TC Floorspace includes retail, office and hospitality & leisure, as well as other uses
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6. Luton Hotel Demand Drivers
6.1. Overview
6.1.1. Within this section we discuss the key demand drivers supporting further growth in Luton’s hotel supply. While the estimated growth in airport passengers at London Luton Airport is undoubtedly a key demand driver, it is not the only one.
6.1.2. The key hotel demand drivers in Luton include:
. Hotel Occupancy . Housing Growth . Business and Job Growth . Tourism . Wedding and Corporate Demand . Town Centre Regeneration . Visitor Attractions . London Luton Airport . Airport Contracts
6.2. Hotel Occupancy
6.2.1. A key indicator of a healthy hotel market is occupancy. Figure 6.1 shows historic occupancy levels for Luton between 2015-2019. The industry benchmark for when demand exceeds supply is 70%. As can be seen average hotel occupancy in Luton continues to exceed the 70% threshold averaging 76% between 2015-2019.3 This is despite the UK economy growing less quickly over this period with year on year GDP growth softening from 2.4% in 2015 to 1.4% in 20194 and over 450 rooms being added to Luton’s hotel supply since 2015.5
3 STR 2021 4 ONS 5 AM:PM 2021
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Figure 6.1. Luton Hotel Occupancy, 2015-2019
85 2.5 75 65 2.0 55 1.5 45 35 1.0 25
15 0.5 5
-5 2015 2016 2017 2018 2019 0.0
Occupancy (%) Avg Occupancy 2015-19 (%) Industry Benchmak Y on Y UK GDP Growth
Source: Savills (2021); STR (2021)
6.2.2. While the Covid-19 pandemic has had an unprecedented impact on the UK and global tourism and visitor economy in 2020 and into 2021, Savills expect the hotel market to have recovered by the end of 2022 provided there are no further rampant Covid strains or a material and sustained stock market correction. Once confidence is back, performance and value growth will follow.6
6.2.3. These views are corroborated by sources such as Tourism Economics who are forecasting global and domestic tourism to return to near 2019 levels by 2022. Also responses to various sentiment surveys point towards a willingness to return to regular travel soon after the threat of the virus has been removed. For example, the latest IATA (International Air Transport Association) travel survey asked respondents when they would feel comfortable travelling regularly again, with a promising 80% suggesting this would happen within six months of the pandemic subsiding. This suggests the pent-up appetite to travel, when possible to do so, remains strong for the vast majority.7
6.3. Housing Growth
6.3.1. The Luton Hotel Study (2015) identified that the majority of visitors in Luton are “visiting friends and relatives.” This is likely to grow further given continued housing growth being experienced in Luton. Figure 6.2 presents the increase in Luton’s housing stock from 2009 to 2019. This shows a 6% increase in the number of dwellings over the ten year period and 4% since the publication of Hotel Study in 2015.
6 Savills Blog: Value, volume, performance: predicting the hotel market recovery trajectory, 17 February 2021 7 Savills Publication: Hotel Market Insights: Travel & Tourism Outlook, 22 January 2021
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Figure 6.2 Housing Stock in Luton (2009-2019)
81,000
80,000
79,000
78,000
77,000
Housing Housing Stock 76,000
75,000
74,000
73,000 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Source: Ministry of Housing, Communities and Local Government (MHCLG) 2019
6.3.2. Figure 6.3 presents the results of Luton’s Housing Delivery Test from 2017 to 2020. This shows that the number of housing deliveries has consistently exceeded the housing target over the three year period.
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Figure 6.3 Luton’s Housing Delivery Test (2017-2020)
1,000
900
800
700
600
500
400 NumberofUnits 300
200
100
- 2017-2018 2018-2019 2019-2020
Target Deliveries
Source: Ministry of Housing, Communities and Local Government (MHCLG) 2021
6.3.3. Figure 6.4 presents Luton’s projected household growth from 2019 to 2029. This indicates a 7.6% growth over the 10 year period of 2019 to 2029, which equates to an annual growth rate of 0.7% further indicating “visiting friends and relatives” will continue to be a demand driver for hotels in Luton.
Figure 6.4 Luton’s Projected Household Growth (2019-2029)
83,000 82,000 81,000 80,000 79,000 78,000 77,000 76,000
NumberofHouseholds 75,000 74,000 73,000 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
Source: Oxford Economics, 2021
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6.4. Business and Job Growth
6.4.1. The Luton Hotel Study also identified a significant proportion of visits to Luton are for “business purposes.” This is directly related to the number of businesses and business growth in Luton.
6.4.2. Figure 6.5 presents the change in total business counts from 2010 to 2020. This shows a 68% growth over the ten year period and 31% increase since the publication of the Hotel Study in 2015.
Figure 6.5 Luton Business Counts Growth (2010-2020)
12,000
10,000
8,000
6,000
Business Business Counts 4,000
2,000
- 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Source: Business Register and Employment Survey (BRES), 2020
6.4.3. Figure 6.6 below shows the business counts growth in the Accommodation and Food Service Activities sector between 2010 and 2020. This indicates a 22% growth in the sector over the ten year period and 14% since publication of the Hotel Study in 2015.
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Figure 6.6 Business Counts Growth in the Accommodation and Food Service Activities Sector (2010-2020)
340
330
320
310
300
290
280 Business Business Counts 270
260
250 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Source: Business Register and Employment Survey (BRES), 2020
6.4.4. Since the publication of the Hotel Study in 2015 there has been an increase of 4,000 people in employment in Luton, increasing from 89,000 in 2015 to 93,000 in 2019, which equates to a 4% increase in Luton’s workforce.
6.4.5. Figure 6.7 presents the growth in Luton’s Accommodation and Food Service Activities sector from 2015 to 2019. Luton’s Accommodation and Food Service Activities sector employed 4,500 people in 2015 which has increased to 5,000 people in 2019, signifying an 11% increase in the number of employees in this sector. This indicated that employment in this sector was consistent during 2015 and 2018, and experienced a sharp increase in between 2018 and 2019.
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Figure 6.7 Jobs Growth in Luton’s Accommodation and Food Services Activities Sector (2015-2019)
5,100
5,000
4,900
4,800
4,700
4,600
4,500
4,400
4,300
4,200 2015 2016 2017 2018 2019
Source: Business Register and Employment Survey (BRES), 2020
6.4.6. In terms of Luton’s workforce, the working age population (people aged 16-64 years) is anticipated to grow by 1.9% between 2019 and 2029, from 133,977 in 2019 to 136,581 in 2029. This equates to an annual growth of 0.2%8.
6.4.7. Oxford Economics presents Local Authority Forecasts which detail the anticipated change in employment in each sector by Local Authority from 2011 and 2031. Table 6.1 presents the job growth in Luton by industry sector from 2011-2031. The Accommodation and Food Services Sector is expected to experience a 34% increase in the number of jobs from 2011-2031, which equates to an annual growth of 1.5%. Overall job growth in Luton is estimated to be 0.8% pa to 2031 further indicating visitors to Luton for “business purpose” is likely to remain strong into the future.
Table 6.1 Job Growth in Luton by Sector (2011-2031) Sector Jobs (2011) Jobs (2031) Growth 2011-2031 (%) Annual Growth (%) Accommodation and 3,607 4,846 34.3% 1.5% Food Service Administrative and 15,834 22,155 39.9% 1.7% Support Agriculture, Forestry and 7 62 754.9% 11.3% Fishing Arts, Entertainment and 2,120 2,750 29.8% 1.3% Recreation Construction 5,070 7,596 49.8% 2.0%
8 Oxford Economics, 2021
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Electricity, Gas, Steam 22 38 75.6% 2.9% and Air Financial and Insurance 1,106 715 -35.4% -2.2% Human Health and Social 10,557 16,320 54.6% 2.2% Work Information and 2,088 2,564 22.8% 1.0% Communication Manufacturing (Total) 9,174 5,547 -39.4% -2.5% Mining and Quarrying 0 0 0% 0% Other Service Activities 2,165 1,770 -18.3% -1.0% Education 9,456 9,886 4.6% 0.2% Professional, Scientific 6,016 8,210 36.5% 1.6% and Technology Public Administration and 3,775 3,070 -18.7% -1.0% Defence Real Estate Activities 2,490 2,411 -3.2% -0.2% Transportation and 7,810 10,457 33.9% 1.5% Storage Water Supply 331 288 -12.9% -0.7% Wholesale and Retail 13,962 12,718 -8.9% -0.5% Trade Total 95,563 111,403 16.6% 0.8% Source: Oxford Economics, 2021
6.5. Tourism
Domestic Tourism
6.5.1. Domestic tourism is a key demand diver for hotels. While domestic tourism has been impacted significantly by the pandemic, domestic tourism is likely to be the first to recover as the UK vaccination programme is rolled out. Before the pandemic domestic tourism was growing in Luton as we discuss below.
6.5.2. Figure 6.8 presents the change in domestic trips to Luton between 2009 and 2019. On average, between 2009 and 2011, 180,000 trips we taken each year to Luton. This has increased by 12% by 2019, with an average of 202,000 trips taken each year between 2017 and 2019. Since the publication of the Luton Hotel Study the number of domestic visits in Luton has increased by 9%.
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Figure 6.8 Domestic Visits to Luton (2009-2019)
300,000
250,000
200,000
150,000 TotalTrips 100,000
50,000
- 2009-2011 2010-2012 2011-2013 2012-2014 2013-2015 2014-2016 2015-2017 2016-2018 2017-2019
Source: Visit Britain
6.5.3. Figure 6.9 presents the increase in the number of domestic nights in Luton between 2009 and 2019. On average 364,000 nights were spent per year between 2009 and 2011, which has increased by 66% over the 10 year period, with 603,000 nights per year between 2017 and 2019. Since the publication of the Luton Hotel Study the number of domestic nights in Luton has increased by 54%.
Figure 6.9 Domestic Nights in Luton (2009-2019)
700,000
600,000
500,000
400,000
300,000 TotalNights
200,000
100,000
- 2009-2011 2010-2012 2011-2013 2012-2014 2013-2015 2014-2016 2015-2017 2016-2018 2017-2019
Source: Visit Britain
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International Tourism
6.5.4. International tourism in Luton has grown consistently thereby confirming it as a key growth driver for hotels. While the Covid-19 pandemic has had an unprecedented impact on international tourism in 2020 and into 2021, Savills expect the hotel market to have recovered by the end of 2022 as we discussed earlier.
6.5.5. Figure 6.10 presents the growth in international visits to Luton from 2009 to 2019. It grew by 167% between 2009 to 2019, from 114,631 visits in 2009 to 190,932 visits in 2019. Since the publication of Hotel Study in 2015, international visits have grown by 34%.
Figure 6.10 International Visits to Luton (2009-2019)
250,000
200,000
150,000
100,000
International International Visits 50,000
- 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Source: Visit Britain
6.5.6. Figure 6.11 below compares the growth of international visits in Luton against the UK since 2009. This shows a faster growth for Luton compared to the UK with annual average growth at 7% against 3% for the UK.
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Figure 6.11 International Visits Growth in Luton and the UK
200%
180%
160%
140%
120%
100%
80%
60%
40%
20% Change Change in International Visits from2009 0% 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Luton UK
Source: Visit Britain
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6.6. Weddings and Corporate Demand
6.6.1. The Luton Hotel Study identified people attending weddings and conferences as key markets for Luton hotels. The Study showed that the majority of Luton’s hotels received 1-5 bookings for either conferences or weddings per week.
6.6.2. The Study identified Putteridge Bury, Venue Central and Luton Hoo Hotel as major wedding venues in the area. The Council have received planning applications for wedding venues stemming from the lack of facilities in Luton able to cater for the large guest lists, characteristic of Asian weddings. This generates further demand for hotels in Luton to cater for events and wedding of this size, and for hotels that would service the wedding market.
6.6.3. The majority of hotel guests in Luton are staying for business or business travel purposes rather than for tourist purposes. The airport is the main source of midweek demand for most hotels in the Borough. A survey conducted by the Luton Hotel Study (2015) showed that midweek trade accounted for 50-95% of hotel’s weekly trade. The Proposed Development would offer affordable accommodation to serve those attending weddings and residential conferences, with good transport links and amenities nearby.
6.6.4. Table 6.2 identifies a number of key conference and wedding venues in Luton town centre and their distance from the Proposed Development. As these venues do not provide accommodation, the Proposed Development will be able to provide affordable, well-located accommodation for guests attending weddings and conferences.
Table 6.2 Wedding and Conference Venues in Luton Town Centre Venue Name Distance from Proposed Development
The Auction House 0.9 km
The Riverside - Venue 360 1.7 km
Venue Central 1.4 km
TrueVine Conference Centre 0.8 km
AW House 0.4 km
Grand Park Hall 0.9 km
Crescent Hall 0.5 km
UK Centre for Carnival Arts 0.8 km
Source: Savills (2021); Google Maps (2021)
6.7. Town Centre Regeneration
6.7.1. As mentioned in Section 4, there has been significant investment around sites in Luton Town Centre. Projects include the regeneration of St George’s Square, the Hat District, and the development of a new football stadium for Luton FC at Power Court.
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6.7.2. Many of these projects, once completed and during their construction, will provide additional demand for hotels, particularly those located nearby within the town centre such as the Proposed Development.
St George’s Square
6.7.3. The £2.5m redevelopment of St George’s Square in 2007 has been a major step in the regeneration of Luton town centre.
6.7.4. Luton Council decided to redevelop the square to create a new central plaza that would be flexible enough to regularly host a range of organised events, including Luton's international carnival.
6.7.5. The regeneration project received a Civic Trust Commendation in 2008 and British Council of Shopping Centres (BCSC) Gold Medal for Town Centre Environment in 2007, which recognizes work undertaken in towns and cities across to the UK to improve the urban environment and encourage retail investment. The judges highlighted the elimination of anti-social behaviour and the improved design of the square, effectively integrating retail and leisure destinations, triggering investment by the Mall9.
6.7.6. Since opening the Square in 2008, Luton has seen a significant change in the attitude of people to open space. The Square has become the heart of the town with many events, festivals and markets organised throughout the year.10
The Hat District
6.7.7. Luton Culture Trust has secured £7.2m (including £3m from the South East Midlands Local Enterprise Partnership’s (SEMLEP) Local Growth Fund) towards refurbishing 3 Hat House, Hat Works, the existing Hat Factory Centre and a new building named Hat Studios11.
6.7.8. The vision for the project is to create more work opportunities, amplify cultural vibrancy, preserve important heritage buildings and breathe new life into the town. The Hat District will create a bustling neighbourhood where artists, makers, students, producers, audiences, visitors and creative businesses can share their knowledge and skills.
6.7.9. The creative ecosystem will nurture and develop creative business start-ups and entrepreneurs whilst also providing SME creative industries with an environment in which to grow and thrive.
6.7.10. The Hat District is the best connected creative workspace cluster in the UK, being a two-minute walk from a mainline train station (22 minutes to London) and bus station connecting the region. In addition, it is only 10 minutes by car from the M1 and London Luton Airport12.
9 https://www.gillespies.co.uk/projects/st-georges-square-luton 10 https://my.landscapeinstitute.org/case-study/st-george%27s-square/06156c22-d37b-e911-a99b-00224801ab04 11 SEMLEP (2019): Local Industrial Strategy 12 https://thinkluton.co.uk/key-developments/hat-district/
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6.7.11. The buildings will provide 25,000 sq.ft of new workspace for creative industries in Luton. This will enable 133 additional jobs and is estimated to attract 135,000 new visitors by 202213.
6.7.12. The Hat Factory Arts Centre was re-opened in September 201914. It offers a theatre, comedy bar, café, education rooms, start-up retail space and a vibrant year round arts programme. The arts centre has been refurbished to increase and widen access to the arts by creating new spaces, better venues, a larger reception, café and social area.
Power Court Stadium
6.7.13. Planning permission was granted for a new stadium for Luton FC at Power Court in the town centre in 201915. The proposed development includes a stadium with capacity for up to 23,000 spectators (it is intended that, at the time of opening, the stadium will have a capacity of 17,500. The potential to move to 23,000 provides the Club with flexibility to expand as and when they climb up the leagues and, therefore, meet the additional demand to watch matches), as well as 550 residential units, a live entertainment venue, flexible educational/community/commercial floorspace, a hotel, retail and food and beverage floorspace, and a supermarket16.
6.7.14. The scheme will deliver a sustainable extension to Luton Town Centre, delivering a vastly improved entertainment offer during the day and into the evening, to increase visitor numbers.
6.7.15. The Club is firmly of the view that the most appropriate site for a new stadium is in the centre of the town, where it will be at the heart of the community, highly accessible and will also act as a catalyst for regeneration.
6.7.16. Due to the site’s development challenges (such as land contamination issues, relocation of a substation and the need to redirect the River Lea which flows underneath the site) significantly impacts the viability of the scheme. Therefore, the development at Power Court will be facilitated by a separate, but linked application for the development of Newlands Park at Junction 10 of the M1.
6.7.17. An Economic Impact Report by KPMG in 2016 for the scheme, estimates that the new stadium alone could generate an additional £3.4m per year for Luton’s economy and up to 83 FTE jobs, depending on the club’s position17. This is over and above what the club currently contributes to the economy. Furthermore, the report estimates that other proposed facilities could add almost £23m a year to Luton’s economy, sustaining 800 FTE jobs.
13 Ibid 14 Ibid 15 Planning ref: 01400/OUTEIA 16 Planning Statement: 01400/OUTEIA 17 KPMG (2016): The economic impact of 2020 Developments (Luton) Ltd. Proposed developments at Power Court and Junction 10 – Planning ref: 01400/OUTEIA
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6.7.18. In December 2020, the Luton FC Chief Executive stated that the club was planning to submit ‘major modification applications’ for Power Court and Newlands Park, which are hoped to be decided upon by Spring 202118. The effect of Covid-19 and surrounding developments (particularly a new Aldi supermarket nearby) has led to rethink of design. However, the club is still committed to enhancing the town centre with the stadium development, and increasing the number of dwellings, including affordable dwellings to meet Luton’s housing targets.
6.7.19. Currently, up to 1,500 seats are allocated to away fans at the current Kenilworth Stadium, equating to 14% of seat capacity19. Assuming this proportion remains the same, the new stadium at Power Court could accommodate between 2,535 (with 17,500 seat capacity) and 3,331 (with 23,000 seat capacity) away fans, many of whom may require hotel accommodation located near the stadium in the town centre. Therefore, the Proposed Development could cater to this demand, being well-located in the town centre and less than 1km from the proposed new stadium at Power Court.
6.7.20. Construction of the stadium is expected to begin in first half of 202220.
6.8. Visitor Attractions
6.8.1. Luton also benefits from a number of other visitor attractions which generate hotel demand. Some of the key ones are shown in Figure 6.12.
6.8.2. The Proposed Development is located near The Galaxy, which provides a number of leisure facilities such as a cinema, bowling and a variety of restaurants21. The Mall Luton is a large shopping centre located in Luton town centre. Following the completion of the redevelopment of St George’s Square (detailed above), a new entrance to the Mall was built directly onto the Square22. Furthermore, Luton Indoor Market is open Mondays to Saturdays, with local vendors selling a range of goods and services, such as international cuisine, homeware, clothing, and beauty products23.
6.8.3. Luton FC’s current football stadium is located at Kenilworth Road, but will be relocated to Power Court in the town centre, as detailed above. Luton Hoo Estate’s Walled Garden provides tours and contains structures and flowers that were put in place in the 1830s.
18https://www.lutontoday.co.uk/sport/football/luton-town/sweet-confirms-rethink-needed-power-court-insists-new-hatters- stadium-wont-be-delayed-2966897 19 https://www.awaygames.co.uk/away-day-guides/luton-town-away/ 20 Ibid 21 https://www.lutongalaxy.co.uk/ 22 https://my.landscapeinstitute.org/case-study/st-george%27s-square/06156c22-d37b-e911-a99b-00224801ab04 23 https://lutonindoormarket.co.uk/index.php/shop-and-eat/
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6.8.4. Luton International Carnival is an annual one-day carnival celebration in Luton, attracting around 50,000 people24. It is the largest one-day carnival in the UK and the second largest carnival overall, second only to Notting Hill Carnival25. In 1998 the Luton Carnival received ‘international status’, when it received the largest single lottery award that is available for carnival development26. The carnival features an international parade, music, dance, artistry and cuisines.
6.8.5. The Luton Mela takes place over two days, attracting 40,000 people each year27. The first Luton Mela took place in August 2000 and has developed into one of the most significant and well attended south Asian cultural events in the eastern region28. The event comprises rides and fairground attractions, a variety of musical and dance performances and a number of stalls showcasing South Asian culture29.
6.8.6. The principal provider of cultural services in Luton is the Culture Trust Luton. Luton Culture opened Stockwood Discovery Centre and undertook a major refurbishment of the Central Library. Pre-Covid, the sites managed by the Trust attracted over 285,000 visits per annum30.
6.8.7. The Trust is responsible for the following sites:
. Stockwood Park and Discovery Centre: the Centre has gardens, interactive exhibitions and the largest carriage collection in Europe. The Centre won a TripAdvisor Certificate of Excellence. . Wardown House, Museum and Gallery: Wardown House, Museum and Gallery is a Grade II listed building situated in the grounds of Wardown Park . Luton Library Theatre: the Theatre presents theatre, comedy, music and spoken word . Hat Factory Arts Centre: the Centre was re-opened in 2019 as detailed above
24 https://www.bbc.co.uk/news/uk-england-beds-bucks-herts-22672523 25 https://www.carnivaland.net/luton-international-carnival/ 26 Ibid 27 https://outdoorartsuk.org/events/zee-luton-mela/ 28 https://www.stallandcraftcollective.co.uk/luton-mela-5240-event 29 https://lutonbid.org/event/luton-mela/ 30 https://www.culturetrust.com/
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Hotel Need Assessment Cresta House, 8 Alma Street, Luton LU1 2PL
Figure 6.12 Luton Visitor Attractions
Source: Savills (2021)
6.9. London Luton Airport
6.9.1. A major factor behind the proliferation of hotels in ‘out of centre’ locations in Luton is the passenger growth at Luton Airport. In 2019, London Luton Airport was the 5th busiest airport in the UK by passenger numbers and served approximately 18 million passengers31. It is one of the fastest growing major London airports. It has grown steadily over the past 20 years and has recently experienced 10 years of successive growth between 2010 and 2019, as shown in Figure 6.13. During this period, passenger numbers increased from approximately 8.7 million passengers per annum (mppa) to 18 mppa (circa 109% increase), averaging 9% annual growth. It is anticipated that the airport will recover swiftly from the temporary implications of COVID-19 travel restrictions, having been the second busiest airport in the UK by passenger numbers during the restrictions (e.g. May and June 2020) after Heathrow32.
31 Civil Aviation Authority (CAA): Size of Reporting Airports, 2010-2019 32 Planning Statement for Planning ref: 21/00031/VARCO
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Figure 6.13 London Luton Airport Annual Passenger Numbers (2010-2019)
20,000,000
18,000,000
16,000,000
14,000,000
12,000,000
10,000,000
8,000,000
6,000,000
Annual PassengerNumbersAnnual 4,000,000
2,000,000
- 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Source: Savills (2021); CAA (2010-2019)
6.9.2. The airport secured planning permission in 2014 for the development of the necessary infrastructure to increase passenger throughput from 12 to 18 million passengers a year. The forecast at the time estimated that an 18 mppa cap would accommodate steady growth in passenger numbers up until 2028. However, growth in passenger numbers has occurred at a much more rapid rate than was originally forecasted and the 18 mppa cap was reached in 2019. Therefore, in January 2021, an application by the airport for approval to increase the number of passengers from 18 mppa to 19 mppa was submitted to Luton Council. The additional 1 mppa would be achieved through using larger aircraft and increasing passengers during times of low utilisation through the year. The airport argues that raising the cap to 19 mppa would allow for sustainable growth and would assist in economic recovery both locally and nationally.
6.9.3. In the Luton Hotel Study (2015), it was noted that future demand for hotel accommodation would be highly driven by the Luton expansion plan. Using UK Aviation Forecasts prepared by the Department for Transport, the Study reported that in a low-growth scenario, the estimated number of passengers flying through the airport would be 11 million in 2030 and 15 million in 2030, and in the high-growth scenario 15 million in 2020 and 18 million in 2030. As referenced in the Planning Statement to increase the passenger cap, London Luton Airport served 18 mppa in 2019, meeting the high-growth scenario estimate for 2030 in the Hotel Study 11 years early. This suggests that future demand for hotel accommodation in Luton will be much higher than anticipated in the Luton Hotel Study.
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Hotel Need Assessment Cresta House, 8 Alma Street, Luton LU1 2PL
6.10. Airline Contracts
6.10.1. Demand for bedroom space for aircrews, management and administration working at London Luton Airport is high in the area surrounding the airport itself, and for some 3 or 4 star hotels in the town centre. Aircrew business tends to be very low-rated and is highly competitive but can provide hotels with stable demand and good base business. The demand for hotel accommodation is high and often exceeds the supply of hotels in Luton Borough. For example, EasyJet also uses hotel facilities in Hemel Hempstead, Hatfield and Dunstable due to inadequate supply in Luton. Midweek, the EasyJet academy training centre provides new entrant training and recurrent training for the crews, and is a major source of demand for hotels midweek in Luton.
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Hotel Need Assessment Cresta House, 8 Alma Street, Luton LU1 2PL
7. Economic Benefits
7.1. Introduction
7.1.1. This section summarises the economic benefits of the Proposed Development.
7.1.2. The assessment of economic benefits has followed the approach set out in guidance including the Homes and Communities Agency Additionality Guide (HCA, 2014) and the DCLG Appraisal Guide (2016). It includes the methods and approaches described to assess leakage, displacement and multiplier impacts of development projects. The assessment has utilised relevant local level data available to consider the scale of the employment workforce, Gross Value Added (GVA) benefits, and revenues to local government.
7.2. Assumptions and Limitations
7.2.1. The current Coronavirus crisis will have a major impact on demand and values in the short to medium term. The analysis and conclusions should be considered as potentially relevant to the situation once the UK economy has recovered from the most significant impacts of Coronavirus. However it is too early to estimate how the crisis will impact on trends, and for example how strong the rebound will be and to what degree there is a change in the composition of demand and activities in the post Coronavirus crisis world. Our findings should be kept under review as the situation evolves.
7.2.2. These figures are based on our understanding of the scheme and a range of assumptions. Estimates of benefits are subject to uncertainties. Our assumptions and calculations are based on good practice, guidance and available data. We estimate that actual impacts are likely to be in a range of +/-20% of the figures given.
7.3. Summary
7.3.1. Table 7.1 provides a summary of the estimated economic benefits of the Proposed Development. The hotel will create 8 FTE construction jobs, as well as contribute £105k to local businesses through supply chain linkages, and 8 FTE on-site jobs once the hotel is operational generating £157k of GVA. Taking into account leakage, displacement and multiplier effects 6 of these on-site jobs are likely to be filled by Luton residents. Visitors to the hotel are estimated to generate local expenditure of £686k per annum to support the town centre and the wider local economy.
7.3.2. Further information relating to the economic benefits of the Proposed Development is presented in an infographic in Appendix 1 of this report.
Table 7.1 Summary of Economic Benefits Outcome Benefit Construction jobs (FTE) over 1 year construction period 8 for Luton residents
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Total value of local procurement over 1 year construction £105,000 period On-site operational jobs (FTE) for Luton residents 8 (6 of which will be for local residents) Total gross GVA per annum £157,000 Hotel visitor expenditure in the local economy per annum £686,000 Total business rates income for Luton Council per annum £11,000 Cumulative business rates income over 20 years* £162,000 Source: Savills (2021); * Net present value, discounted at the Treasury Green Book rate of 3.5% per annum
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8. Conclusion: Demand / Supply Balance
8.1.1. Luton has 25 existing hotels, with only 24% located in the town centre (and only 15% of hotel bedrooms). This is considered to be an extremely low proportion given hotels are regarded as a town centre use by the NPPF. Luton has a significantly lower proportion of hotel bedrooms located in its town centre (15%) when compared with St Albans (27%), and Milton Keynes (33% - more than twice as high as Luton). This demonstrates Luton town centre is benefiting much less from hotel development than nearby town centres.
8.1.2. The majority of Luton’s existing hotels, both within and outside the town centre, provide a range of onsite facilities such as restaurants. The provision of onsite facilities is aimed at hotels retaining as much of their visitor’s expenditure as possible rather than the using outside food and beverage and leisure facilities. In effect the hotels with onsite facilities compete with the town centre for visitor expenditure. Similar to the supply of existing hotels, the majority of the Luton’s hotel pipeline (60% of proposed hotel bedrooms) are proposed outside the town centre.
8.1.3. Since the publication of the Luton Hotel Study in 2015, a number of key demand drivers for hotel accommodation in Luton have been growing, pre-pandemic. These demand drivers include:
. Hotel Occupancy: In terms of demand for hotel accommodation in Luton, average hotel occupancy in Luton has averaged 76% between 2015-2019. The industry benchmark for when demand exceeds supply is 70%. This is despite the UK economy growing less quickly over this period with year on year GDP growth softening from 2.4% in 2015 to 1.4% in 2019 and over 450 rooms being added to Luton’s hotel supply since 2015. . Housing growth: Luton has experienced strong housing growth, with a 4% increase in the number of dwellings since the publication of the Hotel Study in 2015, as well as the number of housing deliveries consistently exceeding the housing target between 2017 and 2020. Furthermore, the number of households in Luton is projected to grow 7.6% between 2019 and 2029. This could lead to more people coming to Luton in order to visit family and friends and thus increase demand for hotel accommodation. . Business and job growth: Between 2015 and 2019, there has been an increase of 4,000 people in employment in Luton, which equates to a 4% increase in Luton’s workforce. Luton’s Accommodation and Food Service Activities sector employed 4,500 people in 2015 which has increased to 5,000 people in 2019, signifying an 11% increase in the number of employees in this sector. Strong business and job growth will continue to drive corporate demand for hotel accommodation in Luton. . Tourism: in terms of domestic tourism, since the publication of the Luton Hotel Study the number of domestic visits to Luton has increased by 9% and the number of domestic nights in Luton has increased by 54%. International tourism to Luton has increased by 34% since the 2015 Study. This equates to Luton experiencing a 7% annual growth rate, outstripping the UK’s annual average growth rate of 3%. These factors point to strong demand for hotel accommodation in Luton. . Weddings and corporate demand: due to the accessibility to the airport, Luton accommodates strong demand for residential conferences and weddings. There are a number of wedding and conference venues located in the town centre which do not offer onsite accommodation. Therefore, the Proposed Development could offer affordable accommodation to serve those attending weddings and residential conferences, with good transport links and amenities nearby.
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. Town centre regeneration: regeneration projects at St George’s Square, the Hat District, and Luton FC’s stadium at Power Court are likely to make Luton town centre a more attractive destination and aim to grow the number of visitors. Currently, up to 1,500 seats are allocated to away fans at the current Kenilworth Stadium, equating to 14% of seat capacity. Assuming this proportion remains the same, the new stadium at Power Court could accommodate between 2,535 (with 17,500 seat capacity) and 3,331 (with 23,000 seat capacity) away fans, many of whom may require hotel accommodation located nearby to the stadium in the town centre on match days. Therefore, the Proposed Development could cater to this demand, being well-located in the town centre and less than 1km from the proposed new stadium at Power Court. . Visitor attractions: Luton has a number of visitor attractions, such as the Luton International Carnival, Luton Mela, Stockwood Park and Discovery Centre, Wardown House, Museum and Gallery, and the Hat District which attract many visitors who may also be seeking hotel accommodation. . London Luton Airport: In 2019, Luton Airport was the 5th busiest airport in the UK by passenger numbers and served approximately 18 million passengers. It is one of the fastest growing major London airports. It has grown steadily over the past 20 years and has recently experienced 10 years of successive growth between 2010 and 2019. During this period, passenger numbers increased from approximately 8.7 million passengers per annum (mppa) to 18 mppa (circa 109% increase), averaging to 9% annual growth. The 18 mppa has been reached 11 years before the 2030 estimate used in the Hotel Study. It is anticipated that the airport will recover swiftly from the temporary implications of COVID-19 for travel restrictions, having been the second busiest airport in the UK by passenger numbers during the restrictions (e.g. May and June 2020) after Heathrow. The airport secured planning permission for expansion in 2014 and is currently seeking approval to increase its passenger cap from 18 mppa to 19 mppa. Growth in passenger numbers for Luton airport has been much stronger than the forecasts used in the Hotel Study (where it is assumed that most demand will be airport-driven). This suggests that future demand for hotel accommodation in Luton will be much higher than anticipated in the Luton Hotel Study, which would likely lead to higher estimates for the number of hotel rooms required in Luton.
8.1.4. While we understand that the Covid-19 pandemic has affected all facets of the UK economy, Savills expect the hotel market to have recovered by the end of 2022 provided there are no further rampant Covid strains or a material and sustained stock market correction. Once confidence is back, performance and value growth will follow.33
8.1.5. These views are corroborated by sources such as Tourism Economics who are forecasting global and domestic tourism to return to near 2019 levels by 2022. Responses to various sentiment surveys point towards a willingness to return to regular travel soon after the threat of the virus has been removed. For example, the latest IATA (International Air Transport Association) travel survey asked respondents when they would feel comfortable travelling regularly again, with a promising 80% suggesting this would happen within six months of the pandemic subsiding. This suggests the pent-up appetite to travel, when possible to do so, remains strong for the vast majority.34
33 Savills Blog: Value, volume, performance: predicting the hotel market recovery trajectory, 17 February 2021 34 Savills Publication: Hotel Market Insights: Travel & Tourism Outlook, 22 January 2021
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8.1.6. Therefore, the Proposed Development will play a key role in meeting demand for hotel accommodation in Luton, bringing much-needed new hotel investment into Luton Town Centre, improving the balance between ‘in centre’ and ‘out of centre’ hotels in Luton and, by not providing on-site facilities, will help increase visitor expenditure in the town centre.
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Appendix 1: Economic Benefits Infographic
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Hotel Need Assessment
Cresta House, 8 Alma Street, Luton LU1 2PL
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Mark Powney Director
+44 (0)203 107 5418 +44 (0)797 077 0492
savills.co.uk Leos Luton Development Limited March 2021 1