This summer the Airports Commission will announce whether Gatwick or Heathrow will be chosen for expansion as part of plans to enhance UK airport capacity. Whatever the decision, it's likely to have a huge impact on the airport hotel industry. Demand for rooms at Heathrow could increase by as much as 71 per cent and at Gatwick by 42 per cent. In simple terms, this translates to an additional 4,800 rooms and 4,000 rooms respectively.

Even without extra runway capacity, passenger numbers at Gatwick and Heathrow are rising (up by 7.5 per cent and 1.4 per cent respectively in 2014 compared to the previous year). The historical link between airport passenger numbers and hotel demand means that any form of expansion generates a need for additional supply. As a result, new pod hotel concepts such as Yotel and budget boutique operators such as Bloc have begun to enter the scene, giving traditional mid-market brands like Hilton and Holiday Inn a run for their money. Savills sold The Park Inn at Heathrow last year to AXA REIM for £72m and has recently appraised the Bloc at Gatwick.

Citizen M, with no presence in the UK yet but making its mark in European airport markets such Amsterdam’s Schipol, is another brand to watch. This type of product is well suited to the short-stay airport hotel guest and we expect to see these operators expand further.

The introduction of new product types and brands at airports ultimately provides greater convenience for travellers. We await the Airport Commission’s decision with much interest.

Further information

Contact  Savills Commercial or view investment sales and acquisitions