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The developers behind a £110M Birmingham Jewellery Quarter mixed-use development have swapped a hotel for offices, as the Birmingham hotel sector goes out of fashion.
The 4-acre Hockley Mills site was to have seen a boutique hotel and more than 400 apartments. Now developer Blackswan has swapped the 42-bed hotel for 30K SF of offices, and trimmed the number of apartments by around 80.
The decision was prompted by the failure to find a hotel operator, Birmingham Live reports.
The move comes as data shows the Birimingham hotel sector making heavy weather of development prospects.
Despite having the U.K.'s third largest stock of hotel beds at around 12,000 (behind Manchester at 18,000 and London on 138,000) development appetite is limited. Colliers International's U.K. Hotels Market Index 2018 ranks occupier interest in the city as "moderate" with 770 beds in the development pipeline, roughly double the figure in 2016.
Colliers reported that Birmingham has slipped in their overall rankings from 10th to 19th place thanks to higher than average build costs and sluggish growth of revenue per available room. RevPAR has risen just 2% 2016-17, in common with Manchester and London.
"Birmingham has a mature market, and the last five years has seen a boom in hotel development," Colliers International Director Jonathan Wren told Bisnow. "But room rates are not particularly high, neither is occupancy, although we could do with more supply at the quality top-end of the market. We could do with more like Hotel du Vin."
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