Stadium hotels to ‘become the norm’

Hilton’s Nick Smart is expecting the company to sign at least two or three development deals at UK stadiums every year for the foreseeable future as the option of adding hotels to sports venues becomes the norm rather than the exception in the future.

Smart, speaking to TheStadiumBusiness.com at TheStadiumBusiness Summit, explained how Hilton’s developments at stadiums across the UK has accelerated in recent years as venue operators seek new revenue streams via non-matchday options.

“It’s inconceivable to me that major sporting venues don’t push ever harder for non-matchday income and other uses of very valuable property,” said Smart, Hilton’s Vice President of development in north and west Europe.

“I think in 10 to 15 years’ time it will be unusual to find a football club in the top two divisions [in England] that won’t have a hotel attached to it and it will be the norm, rather than today when it is still more of an exception.

“Maybe five years ago there wasn’t much discussion about it, but nowadays there is international interest in hotels at stadiums.

“We’re always keen to add sports to our portfolio. The fastest way to make progress is to do deals as clubs and stadium operators will talk to each other.

“We’re opening hotels on a very regular basis. I’d be disappointed in the UK if we didn’t sign two or three stadium hotel deals every year continuously across lots of sports.”

Sports portfolio

Hilton, through its various brands, has development partners in football, rugby, cricket and horseracing.

Speaking in an earlier conference session during the Summit at Emirates Old Trafford – one such venue where a Hilton has been built under its Hilton Garden Inn brand – Smart said that there were three prime reasons why establishing a hotel at a stadium makes sense.

“Firstly, it is an opportunity for us to earn fees,” he said.

“Secondly, the sheer volume of people visiting stadia – and viewing your brand in a nice context – leads to higher brand awareness.

“Thirdly, there is the opportunity for us to generate premium business.”

Smart later outlined to TheStadiumBusiness.com how Hilton’s variety of hotel brands, from luxury through to budget, combined with the options of newbuild, adaptive reuse or conversion projects, mean there are numerous cost variables for each development.

“No two stadium developments are the same and the cost also depends on whether we will be managing the hotel or whether it is a franchising arrangement,” he added.

“Quantifying the return on investment is difficult, but we’d be disappointed if the hotel didn’t contribute more than 50% of the [non-matchday] business.”

Location, location, location

At Emirates Old Trafford, £12.6m was spent on delivering a 150-bedroom Hilton Garden Inn hotel – the equivalent of £90,000 per key for almost 45 square metres per room. Some of the rooms have prime views of the pitch, allowing them to be converted to hospitality boxes for matches.

Smart said that the Manchester venue made perfect sense for the stadium’s MICE business – whereby Emirates Old Trafford’s operators attract conferences and exhibitions.

Smart added that the focus for Hilton is always “first and foremost whether we would put a hotel there” when looking at a possible new stadium development location.

“We’ve got to believe in the infrastructure and the catchment area, then the sport follows,” he said.

“You could theoretically have quite a small sports venue that is in such a good location that actually the hotel would make economic sense, but for MICE purposes in relation to stadiums, usually a stadium capacity of less than 10,000 could make this sort of project more challenging.

“We are rigorous in terms of due diligence as you need to know the customer and how much debt there is in the deal and whether the project is reliant on an individual. It is important to make sure you are aligned on strategy with the stadium’s owner.”

Images: Hilton