Savills said that the number of smaller format hotels is on the rise, and they are beginning to expand outside of London to other regional cities.
Regional projects currently in the pipeline include a so-far-unnamed 76 pod hostel tipped to open behind Bristol’s Old Market and two Hub by Premier Inn hotels due to open in Edinburgh. Marriott International’s new brand Moxy has secured a site on Liverpool’s Cropper Street.
CitizenM and ZHotel have already started regional expansion, with sites in Glasgow and Liverpool respectively.
Savills said the rise of pods and smaller format hotels could largely be attributed to cost – with most rooms going for £45 - £100 per night.
“If room count can be increased by providing smaller rooms without significantly impacting on average daily rates there can, in the right circumstances, be a positive impact on value,” said Martin Rogers, director of regional hotels at Savills.
A 10-20 per cent increase in land values in cities such as Bristol, Manchester and York, and limited availability of larger properties in historic regional centres is also contributing to the growth of smaller format hotels, Savills said.
Competition
Although smaller and pod hotels might struggle to achieve the star ratings of traditional hotels, Savills said their low price point could force traditional hotels to become more competitive, particularly in tourist regions where guests are unlikely to spend much time in their rooms.
“What these regional pod hotels will offer guests is a central location at a smaller price, two strong motivators to give up that extra bit of space,” said Rogers.
“Improved technology and construction innovations such as flat screen tv’s and improved storage will also mean that the small space will begin to feel less and less like a sacrifice.”
London expansion
Pod and smaller format hotels are also on the rise in London. Marriott plans to open a Moxy at London Heathrow in 2015, Whitbread has announced deals for Hub by Premier Inn hotels on St Swithin’s Lane near Bank and Quaker Street in Shoreditch and CitizenM is planning to open another of its high-tech small format hotels on Holborn Viaduct this year.
BigHospitality visited CitizenM last month to see how the how the hotel brand is using technology to maximise customer experience in a small space.