PROPOSALS for two more hotels have been tabled for a city centre – sparking a warning from existing operators that it could lead to a rates war and redundancies.
It is expected that hundreds of jobs would be created by bids for 160-bed offices-to-hotel conversions at both the former BT Bridge Court on Newcastle’s Quayside and Baron House near the Central Station.
But Ken Ellington, general manager of the Copthorne Hotel on the Quayside, said that more than 1,000 additional rooms have been created by six new hotels built in the last 18 months.
“Most of the hotels have struggled significantly with the onset of the new rooms. There are too many rooms at the same time as the economic downturn,” he said.
One of the bids is to turn the 1995 Bridge Court office block next to the Copthorne into a 160-bed hotel with restaurant, bar and conference facilities.
With a working title of the River View Hotel, the bid to Newcastle City Council has come from HLD (Newcastle) Ltd.
The other application is also for a 160-bed hotel on floors two to seven of the Baron House office block which is flanked by Neville Street, Grainger Street and Westgate Road in the city.
Bridge Court has been empty since it was vacated by BT in October 2011.
The adjacent 156-room Copthorne Hotel, opened 21 years ago, has objected.
Mr Ellington said that the influx of new rooms in the last 18 months has seen hotel occupancy rates fall by 8%.
Planning permission for, and building of, new hotels had largely preceded the economic slump, he added. “Supply has exceeded demand. There are too many rooms and lower revenues,” he said.
He said that this was one of the factors leading to the recent appointment of administrators for the four-star Grey Street Hotel in Newcastle.
Last year a company which owns two Newcastle hotels also appointed administrators.
MWB Group – owner of the Malmaison and Hotel du Vin chains – stressed that its 26 hotels across the two brands would continue to trade normally and were not themselves being placed into administration.
In a letter to the council, Mr Ellington said: “My objection is not based on the threat of increased competition. It is based on the negative economic impact which such premises will have on the local economy.
“The loss of the BT commercial business from Newcastle city centre has been significant in terms of economic impact.”
He said that the council should work towards attracting a new international business for Bridge House. He said: “Any argument that an additional hotel will add more jobs to the city is an empty one.
“The negative impact from 1,018 additional beds which have come into the city across six new hotels has seen a significant drop in profitability, which has already led to enforced redundancies in a number of properties.
“The city centre does not need another hotel.”
The Thistle County Hotel in Neville Street has also objected to the scheme by Baron House Developments for the Baron House office complex which occupies the site of the ornate former Douglas Hotel, which closed in the 1960s.
Consultants Walsingham Planning, for Thistle, said Baron House was an important part of the city centre’s office stock.
“The need for further hotels, which would only lower the overall occupancy rates in the city centre, has not been justified,” said the consultants.
“Six further hotels have added to the stock of visitor accommodation in the city, further reducing overall occupancy rates and there being no evidence that visitor numbers have increased since that time.
“Further hotel development will diminish the viability of the existing stock, putting these businesses and their employees at risk.”
The proposed Stephenson Quarter development behind the Central Station includes a Crown Plaza Hotel, while an 80-bed hotel application has been submitted for the former Blundells and Howard department store opposite St Mary’s Cathedral.
The go ahead has also been given for a 222-bed Motel One hotel at High Bridge in Newcastle and a 139-bed hotel on the former Tyne Tees Television site on City Road.
But Sarah Stewart, chief executive of marketing agency NewcastleGateshead Initiative was upbeat about the future.
She said: “The number of new hotels opening in NewcastleGateshead signals a real confidence in the destination from the private sector.
“We now have 6,500 hotel rooms in NewcastleGateshead and with new brands including Hotel Indigo and Ramada Encore, there’s more choice for visitors, demonstrating we have a healthy visitor economy.”
Hotel occupancy in Newcastle and Gateshead during 2012 was 71.2%, above the regional UK average of 70.3%.
Ms Stewart said: “2012 saw a 25% increase in the number of hotel rooms in the destination, which explains the small decrease in occupancy levels. On a more positive note, the actual number of rooms sold is up 6%.
“That’s something we should be very proud of, especially during these tough economic times. London 2012 Olympic Football and NewcastleGateshead Initiative events EAT! and Bridges Festival helped secure some of the highest hotel occupancy rates last year.
“Saturday July 28, 2012, saw occupancy at 98% and Saturday August 4 stood at 96%. That’s in addition to other traditional busy periods around Great North Run and summer concerts at The Stadium of Light.
“The NewcastleGateshead tourism economy is worth £1.26bn and our hotels play a vital part in the visitor experience. Innovative new hotels like Sleeperz and new international brands like Sandman Signature reinforce our position as one of the UK’s most popular city break destinations.
“We are currently finalising plans to re-run our Future Hotel Study, something we last did in 2007. Working with hoteliers, it will map out current and future investment in the hotel sector as well as identifying future prospects across NewcastleGateshead.”