Liverpool – recently designated European Capital of Culture – and now widely seen as a ‘cool' place to be, has plenty to smile about. In 2005, the city's hotels reported their strongest growth yet, outperforming any other market in the UK. Regeneration, strong economic growth, an increase in airline routes, sporting excellence, and the awarding of the 2008 European Capital of Culture have all proved to be important drivers in the city's success.

According to the HotelBenchmark™ Survey by Deloitte, Liverpool's hoteliers saw revenue per available room (revPAR) increase by an amazing 21% in 2005. Both room occupancy and average room rates saw healthy improvements during the year, increasing by 11.8% and 8.7% respectively. As shown in the table below, average room rate increased by £8 and revPAR by £7, clearly indicating just how impressive the city's performance was in 2005, after four generally static years. Liverpool hotel performance 2001 – 2005:

Impressive economic growth
Merseyside, the county in which Liverpool sits, has recently been enjoying a period of strong economic growth, having outshone the national average for the past three years.

The region has seen more inward investment than any other area in the UK. Over £300m was invested in the area during 2003/4 alone. Several multinationals, including IBM and JP Morgan, have expanded their presence in the area, helping to drive up hotels' midweek business bookings.

Taking to the skies
John Lennon International Airport saw passenger numbers rocket to 4.4m in 2005, up 32% on the prior year. Hard to believe, as it's only six years since the airport first saw passenger numbers pass the 1m mark. However, during this time over £70m has been invested in the expansion of terminal space and new facilities. During 2005, 21 new routes were added, predominately by the low cost carriers. With seven extra routes expected this spring to Bergerac, Carcassonne, Faro, Krakow, Londonderry, Mahon, and Marseille, passenger numbers look set to continue to grow.

Record breaking tourist numbers
Liverpool has always been a favourite with visitors keen to sample its nightlife, culture and sport, and the picture now is looking even brighter. Latest figures from the Scarborough Tourism Economic Activity Monitor (STEAM) show that Liverpool attracted more than 18.9m visitors in 2004 and it is estimated that these exceeded the 19m mark last year. With growing passenger numbers at the airport bringing in more international visitors and strong domestic tourism, local hotels are reaping the rewards.

John, Paul, George and Ringo – cultural icons
Liverpool has since the 1960's been a magnet for Beatles fans with Penny Lane, Strawberry Field and The Cavern being essential stops on any fan's itinerary. Over recent years the city's image has continued to transform. Increasingly Liverpool is seen as a ‘cool' destination, and according to research conducted on behalf of The Merseyside Partnership, Liverpool has now claimed third place in the Image League, which tracks consumers' perceptions of major UK cities.

The city boasts more galleries, theatres and museums than any UK city except London, and is also home to the Tate Liverpool, one of only four Tate galleries in the UK. From September to November, the city will celebrate the fourth Liverpool Biennial, the largest contemporary visual arts festival in UK, further enhancing the cities reputation as a cultural centre.

The choice of Liverpool as 2008 European Capital of Culture is expected to lead to £2 billion of investment, 14,000 jobs and many more visitors. Also UNESCO naming the city as a World Heritage Site is also bound to increase interest. These two awards will be instrumental as Liverpool continues to raise its profile, not only domestically, but also internationally.

Success on the field
Liverpool is also a paradise for football fans. The city's two clubs – Liverpool and Everton - were riding high last year with Liverpool winning the UEFA Champions League and both clubs qualifying for this season's tournament. Additional fixtures in May and August helped to fill hotel rooms in these usually quiet months.

However, it's not only football that's attracting the attention of the media and sports spectators this year. The British Open Golf Championships will bring the world's top golf players to Holylake in July this year and again in 2008. Then there's the Grand National at Aintree in April, a perennial favourite. World-class cycling is also on the agenda, when the northwest leg of the Tour of Britain concludes in the city in August.

Changing the face of the city centre
Massive regeneration has lead to the improved fortunes of the city. Major developments, such as Liverpool 1 and the Kings Waterfront Development are transforming the city centre.

Liverpool 1, due to open in 2008, is an innovative £900m project. The 42-acre site will feature 165 shops, 500 apartments, two hotels, five acres of parkland and numerous leisure and entertainment facilities. The Kings Waterfront development, which will include a 9,500 seater arena and conference centre, will form the centrepiece for the European Capital of Culture celebrations. This development is expected to attract more than 200 events each year, boosting the city's reputation as a conference destination.

Conference appeal
The UK Conference Market Survey found that Newcastle saw a larger increase in conference business growth than Liverpool last year. However, it is expected that Liverpool will take the lead upon completion of the Waterfront Development as capacity and amenities increase.
Once the city's first major conference venue is complete, Liverpool will be in a much better position to compete with other UK cities. Major upcoming conferences in the city in 2006 include, Quality Management and Organisation Development (QMOD), the Engineering Education Conference, the European Association for Population Studies, and the Veterinary Anaesthetists Conference.

More demand – more rooms
City centre hotel supply has increased by around 75% since 1997, up from 15 to 28 hotels. Last year saw the arrival of the 194-room Radisson SAS and the 48-room boutique Hope Street Hotel further adding to capacity. Expansion will continue with a 128-room Malmaison opening later this year, along with Alias Ropewalk's fifth UK property. A 310-room Jury's Inn, along with a 132-room Staybridge Hotel will arrive at the Waterfront Development in 2007.

The year that matters
Last year was an exceptional year for the Liverpool hotel market which managed to outperform any other market in the UK. Results for the first quarter of 2006 look promising with revPAR up 12% compared to the same period last year. Whether Liverpool can match the growth seen last year remains to be seen. However given the number of cultural and sporting events, along with a number of large conferences planned for the rest of the year the city's hotels are likely to see continued growth, albeit potentially, at a slower rate than in 2005.

There can be no doubt with the city gearing up to become the European Capital of Culture in 2008 and to take the lead in the UK conference market on completion of the new Waterfront Development – that the future for Liverpool hotels looks good. All this matched with continued regeneration, a growing economy, more tourists, expanding air routes and great sporting fixtures. Liverpool has become the place to be. It looks like the city has finally got its ticket to ride.

Note: All analysis in UK (£).

Thomas Emanuel
HotelBenchmark
+44 (0) 20 7007 3520
Email: themanuel@deloitte.co.uk

The HotelBenchmark™ Survey contains the largest independent source of hotel performance data outside of North America and tracks the performance of over 6,500 hotels and 1.2 million rooms every month.