London Development Brochure

London Development Brochure 2014

The London Hotel Market London is one of the most visited cities in the world and tourism is a significant component in the capital s economy, drawing over 26 million visitors pa and supporting over 235,000 jobs. 75% of all visitors to the UK arrive at a London airport and total international visitor numbers to London were nearly 15.5m in 2012, with visitor spend over 10bn. In 2011, London supplied a total of 118.6m total visitor nights, 77% of which were for international tourists, with the remaining 23% being domestic visitors. Consequently, the London hotel market, which covers the 33 London Boroughs, is the most important in the UK The GLA expects the total visitor nights for London to grow by 55% to 183.6m by 2036, necessitating 43,000 net additional rooms. (Source GLA 2013) London is the only region in the UK where independent, unbranded hotels is not the dominant sector, with Full Service Hotels being the largest group. London also has a lower representation of Budget hotels (just 17.1%) compared with other major cities in the UK. For example, the Branded Budget Sector accounts for around 35.4% of the total market in Birmingham, 28.9% in Manchester and 23.2% in Edinburgh. The London Hotel Market - Distribution of Rooms North London 4,641 London Stratford - Opened February 2012 Forward Funded by Syndicated Investment Fund West London 18,160 Central London 79,935 East London 15,042 South London 8,463 Source: Melvin Gold Consulting 2013 Branded Budget Hotel Supply in London There are 126,241 serviced rooms in London. There is a very uneven distribution of throughout London, with over 63% concentrated in Central London. Whilst West and East London appear to have a reasonable share (15% & 11%, respectively), these regions are dominated by the Heathrow and Canary Wharf/Docklands markets, with the remainder of the West and East regions having very low supply. London Hotel Market Full Service 33.3% Independent 32.1% Budget 15.4% Mid Market 12.7% Consortia 6.6% National Hotel Market Full Service 14.4% Independent 31.3% Budget 17.8% Mid Market 11.3% Consortia 4.7 Beyond central London, Heathrow and Docklands, there is simply a lack of hotel accommodation. In North London there are only 4,641 rooms for a population of over 1 million, ensuring that the overwhelming majority of the 26 million visitors to the capital never set foot in this region. (Source: Melvin Gold Consulting 2013) Assumed other Supply 20.5% www.travelodgedevelopment.co.uk 1

London Boroughs The Boroughs with the lowest representation of budget hotels are listed below: Revenue per available room (RevPar) London vs Provincial RevPAR for London hotels is almost double that of provincial hotels and London has typically experienced stable trading levels due to its popularity as a leisure and business tourist destination. Population Total Bed Stock Branded Budget Haringey 238,900 720 0 Lewisham 275,900 885 0 Sutton 195,000 727 0 Waltham 218,000 931 218 Forest Wandsworth 260,000 1,449 271 Bromley 280,000 1,317 280 Barnet 314,000 1,790 432 Compare the above table with the one below showing other UK cities with a similar size population: Source: STR Global Population Total Bedrooms Branded Budget Cardiff 292,000 4,735 1,661 Newcastle 190,000 4,081 1,264 Nottingham 250,000 4,626 1,028 Using this projection for tourism nights, together with our best estimates of the past relationship between tourism nights spent in London and the supply of serviced tourist accommodation, suggests that around 42,900 net new serviced tourist rooms (or just under 1,800 per annum) will be required by 2036. (Source: GLA 2013) Coventry 303,000 3,614 801 Plymouth 244,000 1,396 742 Source: Melvin Gold Consulting 2013 Budget hotel market penetration in UK Cities Greater London 17.1% Edinburgh 23.2% Greater Manchester 28.9% Glasgow 33.5% Birmingham 35.4% Liverpool 38.7% London Greenwich West - Opened February 2012 Forward Sold to Private Pension Fund Looking across the channel at the European branded hotel market this is made up of 15,000 branded hotels of which 5,474 (38%) are branded budget which further underlines the on going requirement for budget hotels in the capital. (Source: Davis Langdon, EMEA Branded Hotel Market Report 2012 - Understanding the demand for and supply of visitor accommodation in London to 2036. www.travelodgedevelopment.co.uk 2

About Travelodge in London Travelodge is the UK s second largest hotel brand, with 497 hotels and 36,600 bedrooms. Within London, Travelodge is the brand with the most bedrooms, with 7,781 rooms and 59 hotels, which equates to over 20% of the total Travelodge estate within the UK. Branded Operators Share of London Market (by bedroom numbers) Travelodge 14% Premier Inn 13.5% Travelodge London 2014 Openings London Walthamstow - 107 London Greenwich - 104 London Wembley - 86 London Raynes Park - 86 London Hackney - 80 London Chertsey - 73 Travelodge London Hotel Openings Thistle 13.4% Hilton 12.9% Holiday Inn 11.3% Ibis 6.3% Novotel 5.7% HIX 5.4% Crown Plaza 4.2% Jurys 4% The last three years have seen Travelodge open a significant number of new rooms in London and 2014 will see a continuation of this trend. Travelodge London 2012 Openings London Stratford - 188 London Woolwich - 120 London Crystal Palace - 89 London Enfield - 132 London Excel - 131 London Sidcup - 84 London Teddington - 113 London Balham - 90 London Greenwich - 90 London Clapham Junction - 84 London Epsom - 64 London Bromley - 92 London Balham - Opened September 2012 Forward sold to CBREi Travelodge London 2013 Openings London Bethnal Green - 131 London Hounslow -128 London Vauxhall -148 London Vauxhall - Opened April 2013 Forward Funded by Scottish Widows www.travelodgedevelopment.co.uk 3

New Hotel Development Travelodge s aim is to grow its UK estate to 50,000 rooms by 2020, with new growth weighted towards London and the South East. We are looking to open around 5,000 rooms (50 hotels) in London throughout this period. In order to achieve this, we follow a leasehold business model, based on the following terms: FRI 25 Year lease (35 years in exceptional locations) Fixed rent per bedroom Inflation linked 5 yearly rent reviews in line with CPI, with cap and collar provision 6 Months rent free period Region Number of rooms required Central London 7,500 West London 3,040 South London 2,750 East London 2,630 North London 2,890 Number of hotels required We have strong requirements for both Central and Greater London. Since 2006, we have opened 7 hotels in Zone 1, comprising 1,295 bedrooms, and over twice that amount (2,808 bedrooms and 29 hotels) within Zones 2-6. We have a further requirement for almost 18,000 bedrooms in London, with the majority of these in Greater London. To allow Travelodge to develop in the best locations within London, we frequently form part of mixed-use schemes. This allows us to compete on a level playing field with the buoyant residential market. We have co-located with the following uses; supermarkets, retail, pubs, restaurants, gym, residential and offices. In many locations will we accept no on-site car parking, which reduces the land take and improves the profitability of the development. Travelodge s flexibility of design enables us to occupy office conversions and, in many cases, build costs are considerably reduced versus new build hotels. Furthermore, our 25-year lease removes the uncertainty of void periods compared to a conventional multi-let office building. 29 19 21 13 20 Hotel use is accepted by many Local Authorities as an employment use and often comes with a lesser CIL payment than many other uses (especially residential), which can significantly reduce development costs of hotels when compared with other uses. RECENT INVESTMENT DEALS Greenwich Central July 2013-90 rooms Overseas Investor Net Initial Yield: 6.4% Forward Funding Kings Cross July 2013-408 rooms Henderson Global Investors Net Initial Yield: 5.48% Standing Investment Woolwich June 2013-120 rooms Private Pension Fund Net Initial Yield: 6.75% Standing Investment Farringdon April 2013-219 rooms CBRE GI Net Initial Yield: 5.3% Standing Investment Balham December 2011-90 rooms CBREi acted on behalf of Pfizer pension fund Net Initial Yield: 6% Forward Commitment Bethnal Green October 2011-131 rooms Private Pension Fund Net Initial Yield: 6.3% Forward Commitment Teddington Net Initial Yield: Vauxhall Net Initial Yield: June 2011 - rooms111 Mayfair Capital 6.34% (6.15% THL) blended with Nandos Forward Commitment June 2011-148 rooms Scottish Widows 6% (blended with Waitrose) Forward Funded www.travelodgedevelopment.co.uk 4

Flexibility of Development Travelodge Office Conversion -Travelodge London Teddington Before After 40,000 sq ft office building in need of significant investment to upgrade for modern office occupiers in a weak office market. The letting to Travelodge allowed the landlord to not only convert and upgrade the property with the benefit of a Travelodge lease, but to extend to include residential and a Nando s restaurant. Conversion costs came in at 34,000 per room. This was achievable because lifts and windows were retained; although a significant amount of capex was spent on façade treatment. Forward commitment sold at 6.15% to Mayfair Capital. Opened April 2012 Travelodge New Build / Mixed Use -Travelodge London Sidcup Before After When the site was identified by Travelodge, it was occupied by a Carpetright store, pub & first floor offices. An agreement was reached with the landlord who then negotiated the surrender of the existing tenants. Waitrose was also secured as a pre-let. Planning was secured in 2011 for an 84 bedroom hotel, Waitrose & small retail unit. 13-month build period. The project was funded by HSBC bank and has been retained by the developer. Travelodge New Build / Standalone - Travelodge London Enfield CGI of Development Travelodge Enfield Travelodge s original offer was made in 2007, which was declined and the developer decided to pursue a sale to Holiday Inn Express (HIX). HIX could not fund their offer and negotiations with Travelodge were resurrected in 2009. Once terms were agreed, the planning permission was amended for a 132-bed Travelodge hotel in 2010. Other new occupiers on the development include Toyota, Big Yellow and various showrooms. Construction began in 2011, lasting 12 months, using a Travelodge preferred contractor; Barnes Construction. The development was funded by the Chubb pension fund at 6%. Opened July 2012 www.travelodgedevelopment.co.uk 5

London Development Team Neil Short - London North West & London North East Robert Ryan - London Central & London South West Alan Oliver - London South East & London North John Hardy - London Going Concerns Email: neil.short@travelodge.co.uk Mob: +44 (0)7826 550 686 Email: robert.ryan@travelodge.co.uk Mob: +44 (0)7710 337 920 Email: alan.oliver@travelodge.co.uk Mob: +44 (0)7825 982759 Email: john.hardy@travelodge.co.uk Mob: +44 (0)7767 768949 Travelodge retains the outsourced agents shown on the map above. However, we are still keen to appraise all opportunities and encourage other agents. Therefore, we pay non-retained agents introducing opportunities we have not been made previously aware of - 500 per bedroom upon unconditional exchange. Andrew Cole - West London Glyn Pritchard-Jones - North London Chris Collins - North East London Neil Saunders - North West London Alan Hill - London South & London South East Andrew Cordery - South West London Nigel Gouldsmith - South Central London Email: andrew.cole@altusgroup.com Mob: +44 (0)1753 689 000 Email: glyn@perfectland.co.uk Mob: +44 (0)7803 894 888 Email: chris.collins@strettons.co.uk Tel: +44 (0)20 8520 9911 Email: Neil.Saunders@brasierfreeth.com Mob: +44 (0)1923 205 511 Email: alan.hill@alanhillco.co.uk Mob: +44 (0)7710 325 349 Email: andrew.cordery@houstonlawrence.co.uk Mob: +44 (0)7775 620 500 Email: NigelGouldsmith@fieldandsons.co.uk Mob: +44 (0)207 2349 639 www.travelodgedevelopment.co.uk 6

For more information about our Development plans, please consult www.travelodgedevelopment.co.uk and our monthly newsletter www.travelodgepropertynews.com