There has been much debate about whether we now have an oversupply of hotels in NewcastleGateshead, particularly since Silverlink recently began work on its Stephenson Quarter scheme to include a Crowne Plaza hotel in the first phase, the leisure anchor in this emerging business district.

Multi-million pound investment demonstrates faith in the market

This was followed in mid June by the announcement that the Grey Street Hotel has a new owner in the Malhotra Group, which is planning a multi-million pound refurbishment programme to bring it back to being a top class venue, as well as developing a five star hotel elsewhere on Grey Street.     

Such investment shows a significant level of faith in the market, but it is understandable that some existing operators should feel anxious about the enhanced competition.

Hotel operators need to differentiate their offering

From the paying customer’s perspective of course, healthy competition is to be welcomed. However, operators will need to be a lot more perceptive about how they differentiate their offering and there does appear to have been some recent price ‘blurring’ within the three and four star sectors in the city.

The issue is not about whether we can sustain more beds I believe, but the number of stars they carry with them.

Occupancy levels above regional average

Sarah Stewart, chief executive of Newcastle Gateshead Initiative (NGI) reports that, far from the market here being depressed, uptake of beds is actually strong. The latest figures released by STR Global, a national hotel occupancy research agency, indicate that occupancy levels were up 2% on the same time last year with a 72% occupancy level overall – the average is 70% for regions outside of London.

In fact, just after Easter this year, NewcastleGateshead saw a 97% occupancy peak and this type of spike is common when major events are taking place across the region.  For example, six hotels were fully booked over the weekend when the European Athletics Team Championships were held at Gateshead Stadium.

Globally recognised brands performing well

Premium hotels such as the Crowne Plaza, Indigo and Hilton, bring their own market with them because they are global brands with global promotional budgets.  This means the regional image can travel much further than it would ordinarily.  Other operators may lack this level of global recognition so do not benefit from the impact enjoyed by the Hilton when it launched here. 

Where the slow-down is more apparent is in the budget sector, where pockets are squeezed most in the recession, and this has perhaps contributed to the apparent stalling of the Travelodge, with its proposed 260 beds in the former Co-op building on Newgate Street.

More premium facilities will help drive local economy

In my view, what the region needs most are top level hotel brands like the planned Crowne Plaza that might also offer premium exhibition and conference centre facilities to help drive the local economy.

Indeed, if the proposed expansion of exhibition space around the Sage, Gateshead is given the green light towards the end of this year, it would make a major difference to visitor traffic – and help boost local hotel trade.