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Isle of Man Hotel Futures Study

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Isle of Man Hotel Futures Study ISLE OF MAN HOTEL FUTURES Final Report Prepared for: Isle of Man Government Department of Economic Development January 2016 Isle of Man Hotel Futures - Final Report CONTENTS EXECUTIVE SUMMARY ................................................................... i 1. INTRODUCTION ...................................................................... 1 1.1 Background to the Study ........................................................................................... 1 1.2 Study Objective ........................................................................................................... 2 1.3 Uses of the Study ......................................................................................................... 2 1.4 Scope of the Study ..................................................................................................... 3 1.5 Study Methodology .................................................................................................... 3 1.6 Structure of the Report ............................................................................................... 5 2. ISLE OF MAN HOTEL SUPPLY .................................................. 6 2.1. Current Supply ............................................................................................................. 6 2.2. Changes in Hotel Supply .......................................................................................... 11 2.3. Planned and Proposed Hotel Development ....................................................... 15 2.4. Comparisons with Other Island and Resort Destinations ................................... 17 3. CURRENT HOTEL PERFORMANCE & MARKETS ..................... 21 3.1. Occupancy and Achieved Room Rates ............................................................. 21 3.2. Seasonality .................................................................................................................. 24 3.3. Key Markets ................................................................................................................ 25 3.4. Market Trends ............................................................................................................. 29 3.5. Denied Business ......................................................................................................... 31 3.6. Other Issues Affecting Hotel Performance ........................................................... 32 4. STRATEGIC CONTEXT AND DRIVERS OF GROWTH .............. 33 4.1. The Context for Growth in the Isle of Man Hotel Market ................................... 33 4.2 Economic Performance, Outlook & Delivery ....................................................... 33 4.4. UK Tourism Trends....................................................................................................... 36 4.5. The Visitor Economy & Future Strategy ................................................................. 37 4.6. Market and Consumer Response Data ................................................................ 39 4.8. Planning Policies Relevant to Hotel Development ............................................. 41 4.9. Key Projects Impacting on Hotel Demand .......... Error! Bookmark not defined. 5. FUTURE POTENTIAL FOR HOTEL DEVELOPMENT ................... 48 5.1 The Potential for Future Growth in Hotel Demand .............................................. 50 5.2 Hotel Developer & Operator Interest in Isle of Man ........................................... 55 5.3 Hotel Site Availability ................................................................................................ 68 6. CONCLUSIONS & RECOMMENDATIONS ............................. 70 6.1. Hotel Investment Requirements and Opportunities ........................................... 70 6.2. Hotel Planning Policy ................................................................................................ 77 6.3. Recommendations ................................................................................................... 81 6.4. Concluding Comments .......................................................................................... 83 APPENDICES 1 Glossary of Hotel Definitions 2 Hotels Interviewed 3 Stakeholder Consultees 4 Coach Holiday Companies, Group Travel Organisers and Tour Operated Interviewed 5 Hotel Stock Comparisons – Island Destinations, Scottish Islands, and North West England/ North Wales Resorts 6 Isle of Man Company Survey Hotel Solutions January 2016 Isle of Man Hotel Futures - Final Report Lynn Thomason Andrew Keeling Hotel Solutions Hotel Solutions Deleanor House Mill Field House High Street Mill Fields Coleby Bassingham Lincoln Lincoln LN5 0AG LN5 9NP t. 01522 811255 t. 01522 789702 e. [email protected] e. [email protected] Hotel Solutions January 2016 Isle of Man Hotel Futures - Final Report EXECUTIVE SUMMARY __________________________________________________________________________ Hotel Supply and Development The Isle of Man has 31 hotels and large guest houses with 1,290 letting bedrooms , principally 3 and 4 star hotels and large 3 and 4 star guest houses. In addition there is one boutique hotel and one aparthotel. The island has no budget hotels. 91% of the hotel supply is in Douglas. Around one quarter of the hotels close during the winter. There are quality issues with a number of the hotels which are tired and in need of investment. Most do not provide disabled access and none have AA rosettes for food. There has been a sustained loss of hotels – over 1,000 bedrooms in 10 years. Significant closures include the Mount Murray Hotel & Country Club, the Castletown Golf Links Hotel, Castle Mona Hotel, the Imperial, the Grand Island in Ramsey and the Ocean Castle in Port Erin. The most recent new hotels to open on the island are the Town House (2007), Sefton Express (2007) and Ramsey Park (2012). The only hotel to receive multi-million pound investment in the past 5 years has been The Claremont, now a contemporary 4 star business hotel. In terms of new hotel development, the 54 bedroom 4 star Mannin Hotel is to open in Douglas in 2016; there are proposals for a hotel within the Lord Street mixed use development scheme in Douglas; and plans for the redevelopment of the Castletown Golf Links Hotel site and possibly the Bay Queen Hotel at Port St Mary. There are also proposals for a number of other hotel schemes at an early stage. The Mount Murray Hotel & Country Club has just been sold, so will hopefully reopen later in 2016. The Isle of Man is lagging behind competitor island and resort destinations in terms of the scale and quality of its hotel offer, the geographic spread of hotels, and representation of branded and luxury hotel operations. Hotel Performance and Markets The performance of 3 and 4 star hotels on the Isle of Man is significantly below UK provincial averages in terms of occupancy (67% compared to 76% in 2015). This is primarily due to the seasonal nature of the island’s hotel market . Achieved room rates for the island’s 4 star hotels are strong (£82.40 in 2015) due to year round corporate business, double occupancy from the summer leisure market, and premium rates for key events. 3 star achieved room rates (£59.40 in 2015) are well below UK averages due to the dominance of coach tour business. Occupancies outside Douglas are considerably lower. The market is highly seasonal concentrated in the 5 months between May and September. Key markets are event visitors, domestic leisure breaks, coach holidays, special interest i Hotel Solutions January 2016 Isle of Man Hotel Futures - Final Report groups and corporate demand. The corporate market includes an element of high end demand for luxury hotel accommodation and some long stay demand from international visitors and those working on company projects. Secondary markets include: on-island leisure breaks; long holidays; residential conferences; conferences at the Villa Marina; weddings; visits to friends and relatives; contractors; overseas tourists; aircrew and delayed air passengers. A number of hotels regularly deny bookings during the peak season, and all deny significant business during the TT. Other issues affecting hotel performance include staff recruitment and the need for work permits, and limited marketing skills particularly regarding online routes to market. The Potential for Growth in Demand The Isle of Man economic growth strategy forecasts annual growth of 3-4% in GDP and up to 1000 jobs p.a. through to 2020. The vision focuses on delivering an international business centre of excellence, with a focus on wealth creating sectors, both existing and emerging opportunities, including financial and professional services, the visitor economy, e- commerce/e-gaming, ICT, green energy, bio-medics, aerospace and shipping. Funding is in place to support growth in these sectors, including a new £50m Enterprise Development Fund. The Isle of Man is in a good position to benefit from current visitor market trends that forecast continued tourism growth in terms of an ageing but active population with time, money and interest for short break and holiday taking: stronger demand for short breaks; increasing online booking and marketing activity; and a growth in health, wellness and activity tourism. The new Destination Management Plan is based on an average annual growth rate of 2-4% in tourism through growth in the UK short break and family markets and the extension of the season through off-peak events and marketing campaigns. Hotel Company Interest
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