In cities across Europe, regeneration projects are breathing new life into urban areas. Hotels are at the heart of this revitalisation, with many hotel brands increasingly collaborating with local authorities, developers and key infrastructure players. Take for example, Radisson’s partnership with Oxford United for a 180-room hotel and Accor’s partnership with Manchester Airport for an ibis budget and 412-room Tribe hotel.
Get in early
And as cities evolve and grow, the demand for new development continues to intensify, presenting many opportunities. But when it comes to such projects, timing is everything.
Philip Lassman, VP of Development at Accor in Northern Europe, the secret to success lies in getting involved early in the regeneration process.
“It’s much better to get involved early so we can have a more meaningful impact in how these things are designed, how they look and how they feel,” he says.
Accor’s approach is built on forming meaningful relationships with developers, local authorities and key stakeholders in each project and implementing what Lassman describes as marriage brokering where connections are established with key players and intermediaries who act as a go-between.
“It's very often that we're putting our brands on these places but it's the intermediaries that glue us together and enable us to work together.”
Local authority collaboration
And the relationship with local authorities is extremely important as often, not only are they are the ones driving these projects but their backing could also be beneficial when seeking to secure planning approvals.
“Regeneration and working with local communities is key to our strategy,” says Adela Cristea, chief development officer UK, Ireland & Nordics at Radisson Hotel Group.
Radisson has emerged as a key player in the regeneration and urban development space, particularly through its involvement in stadium-led projects and collaborations with local authorities.
Notable examples are its partnership with Manchester City Football Club and its Radisson RED hotel in Edgbaston - a project scheduled to open in 2027 - and which has seen heavy involvement from the local authority that sees it as a crucial part of enhancing the area's appeal to international tourists and visitors.
“In Edgbaston, one of the arms of the local authority is investing heavily in the project. They understand that the project will transform the neighbourhood and drive tourism.
Making it work
But local authorities aren’t the only drivers of funding. Far from it! Deepesh Thakrar, senior director of debt finance at OakNorth highlights the growing interest in funding hotel developments that complement regeneration efforts.
The bank recently provided financial backing to Ancoats Manchester do deliver a 154-key Motto by Hilton in the city’s East Village.
“We’re proud to play a role in supporting this exciting regeneration project,” Thakrar stated noting “we’re seeing lots of activity from other lenders and are being invited to participate in club loans. The market is pretty hot at the moment.”
Despite the optimism, the path to successful regeneration-driven hotel development is not without challenges. According to Lassman, one of the major hurdles is navigating the bureaucracy and red tape associated with local authority projects. “People need to prepare much better than they do today,” Lassman warns. “There needs to be clarity about the funding model, who’s in charge, and what the timeline looks like. Otherwise, projects can get derailed.”
He notes that while a lot of local authority inspired projects are great ideas, they are hindered by a lot of red tape, the lack of a clear plan as well as a lack of clarity as to who the decision makers are.
“People need to actually understand their governance processes and the rules that they have to play by, because once that's clear, that plan is more easily delivered. There needs to be clarity in terms of the route they want to go down, the model they want to go down, and who is able to make decisions in a timely manner.”
Another challenge is the need for hotels to stay relevant as the area continues to evolve.
“Once the area is regenerated, you can’t just stop there. You have to keep it modern and competitive or people will leave. For regeneration schemes, we have to stop being isolationist - you need the hotels, the offices, the leisure centres, the schools, the sports centres. If the office tenants leave, the hotels will suffer. And if the hotels suffer, the office tenants will leave. It’s about keeping the glue together,” Lassman stresses.
Money, money, money
While the financial landscape is competitive, Thakrar sees great promise in regeneration-driven projects, emphasising that when seeking to finance such developments, a key factor the bank considers is the long-term viability of the project, its location, and the expertise of the developers.
“We consider the partner’s ability to build the product, their access to contacts in the industry and experts in delivering a product and operating it well. We focus on the exact micro-location, vicinity to/access to travel, likely footfall and occupancy and the quality of the operator and brand.”
He also stresses the importance of confidence in, and a relationship with the borrower and the experience of the underlying operator.
When seeking to secure funding, Lassman highlights the need for creativity. “Institutional investors traditionally don’t want to work directly with the brands so we have to find a way to be creative and flexible, and that normally involves bringing in a sandwich partner to sit in the middle. We share responsibilities, allowing us to work with these big partners.”
Sniffing out opportunities
A good starting point to securing partnerships/involvement with regeneration opportunities, Lassman says, is collaboration with city councils/local authorities, something which comes from understanding who is envisaging the projects, thinking about what the opportunities are, how a partnership could work as well as understanding the business models of all parties and any constraints to get a deal done.
“You have to really do your homework and you can’t assume anything. You have to know what those constraints are for the people involved in the project in order to be collaborative and to get things done,” he stresses.
When it comes to sniffing out opportunities, Cristea notes that while local authorities are the main players, destination venues such as stadia are also a huge player.
“These venues have realised the need to create a year-round destination. They have huge meetings and events spaces underneath the stands, they have the facilities operationally, they've got the people in place - maintenance, engineering, housekeeping. A hotel could help create footfall at the venue year-round.”
Opportunity could also come in the form of upcoming sporting events.
“We are exploring with destination venues and stadia across sports from football to rugby to horse racing to cricket and hopefully golf courses.”
And these types of projects form a huge part of Radisson’s strategy going forward, with the company noting that following its work at Twickenham and Manchester City, Edgbaston and Oxford United, it has been approached by about three other venues looking to partner up in a similar way. Additionally, it is in active discussions with more local authorities looking for ways to refresh and reinvent their town centres and neighbourhood.
When seeking out these types of projects, Cristea advises that key factors to consider include the credibility of the destination, the owner of the asset and the track record of the partner/local authority.
Looking ahead, the future of hotel development using regeneration projects and partnerships as a tool looks bright, with cities like Manchester, Birmingham and Liverpool leading the way.
“The transformation of Manchester has been phenomenal. There’s also Birmingham, Liverpool, Leeds and Bristol - many cities throughout the UK, even London. There are pockets in London where regeneration is happening for the right reasons,” Cristea says.
The power of the hotel sector when it comes to partnerships and regeneration projects cannot be overstated, and they continue to play a pivotal role in urban renewal.
“Hotels are the spirit level and need to be the central part of community building. They are the sniff test for the local authority to see if their town is relevant,” Lassman notes.