History

Situated in the South West of England, Bristol is the eighth largest city in the United Kingdom covering an area of 110 km2 with a population of just over 400,000. 
Historically, Bristol was one of England’s most important seaports; it was from here that John Cabot set out on his voyage across the Atlantic to Newfoundland in 1497. In fact, much of the city’s wealth, in particular the architecture, was financed by merchants who made their fortunes from the international sea trade. Although the city-centre docks closed to commercial traffic in the 1970s, the neighbouring ports of Avonmouth and Royal Portbury remain active. 

The city benefits from a comprehensive transportation network, it is situated next to the M4/M5 motorway making it easily accessible. London lies 120 miles east of Bristol and Birmingham 90 miles north. The main train station, Bristol Temple Meads, provides direct links to all major cities in the United Kingdom (UK), with services to London every half-hour.  Bristol International Airport lies eight miles south of the city centre, providing connections to other UK destinations, Europe and the United States. 

Economy

Over the past twenty years the commercial focus of Bristol has moved from traditional employment in manufacturing and defence towards the professional service sectors, in particular finance, insurance, media and information technology. The city is now one of England’s largest financial centres outside London, with Lloyds TSB, Sun Life Assurance and Nat West Life all relocating their headquarters here. Amongst the hi-tech and telecoms businesses who have also invested in the region in recent years are Telewest Communications, Orange, British Telecom and Hewlett Packard.

Despite the shift towards professional services, manufacturing still plays an important role in the economy. There are approximately 1,900 manufacturing companies in the Bristol area employing over 54,000 people. Two of the largest of these are Rolls Royce and British Aerospace who employ in the region of 5,000 people each. 

Given the level of investment in the Bristol area over the past decade unemployment has fallen steadily since the end of 1993. In February 2000 the unemployment rate was 3.4 percent, 0.6 percent lower than the average across England.

Commercial developments

Over the last decade, as office space has become increasingly constrained in the centre of Bristol, a number of new business parks have sprung up on the outskirts of the city close to the M4/M5 interchange at Aztec West, Almondsbury and Parkway. However, several new office developments are currently underway in the city centre, which will provide a considerable addition to office supply over the next three to five years. The two principal developments are:

Harbourside – a £400 million mixed use city centre site covering 56,000m2 . Partly funded by the Millennium Commission this development will include office space, housing, hotel, restaurant and entertainment outlets. The site already houses the Lloyds TSB headquarters as well as the science and wildlife centres, Explore @t Bristol and Wildscreen @tBristol, which opened earlier this year. 

Temple Quay - located adjacent to Temple Meads train station this is to be redeveloped for office, retail and leisure usage and will also include a hotel. When complete the development area is expected to cover 15,000m2. Bristol & West, British Telecom and the Department of Environment, Transport and Regions (DETR) are expected to occupy the majority of office space. 

Continuing with the theme of business migration from city centre to out-of-town developments, the retail industry has also followed suit. Recently, Cribbs Causeway retail park has opened on the M5 motorway north of the city and many large retailers, including John Lewis and Marks & Spencer have relocated here from Bristol’s central shopping district, Broadmead. Many people are concerned about the commercial impact this will have on the city centre, although it is hoped that developments such as Harbourside, and Temple Quay along with plans to upgrade the city-centre shopping centre will minimise the impact of migration. 

Tourism

Bristol International Airport is the fastest growing regional airport in the UK, providing flights to all major UK destinations, Europe and the United States. As part of a £43million development programme the airport has recently opened a new £27million terminal building to increase both capacity as well as the number of destinations served. 

Passenger numbers have grown at a compound annual rate of 13 percent between 1996 –
1999 reaching two million passengers in 1999. Growth however is expected to slow to a compound annual growth of six percent up to 2005. 

Principal tourism attractions in the city include: the City of Bristol Museum and Art Gallery;
Bristol Zoo; Clifton Suspension Bridge; SS Great Britain and the Arnolfini Gallery. A number of new tourism attractions have opened in 2000 including the Wildscreen @t Bristol, Explore @t Bristol and an IMAX cinema, all located at the Harbourside development. The city also hosts a number of international annual events including the Balloon Fiesta in August and the International Kite Festival in September.

Hotel supply

The majority of Bristol’s room supply is in the three to four star market, which accounts for just under 80 percent of all rooms in the market, buoyed by the opening of the 201-room City Inn hotel in 1999. In recent years the city has experienced the general trend sweeping the UK, with an increase of budget supply to the market. Existing budget properties include the 94-room Express by Holiday Inn and the 119-room Travelodge, which opened early this year. Future openings within the budget sector include a 240-room Travel Inn scheduled to open in 2001 and a 100-room property to be operated by Fullers Breweries, expected to open within the next two years. 

In terms of other hotel openings in the city, new hotels are planned for the developments at Harbourside and Temple Quay. The hotel at Temple Quay is expected to be of five-star standard with 250 rooms, whilst the property at Harbourside is expected to be of three-four-star standard with 200 rooms and both are anticipated to open in 2003. 

Hotel performance

Since 1997 hotel room occupancy in Bristol has remained above 73 percent. Although average rates have increased each year over this period, growth has slowed since 1997, which may be due in part to the increase in new supply in the three-star and budget sector.  However, year to date performance January to September 2000 is stronger than the same period in 1999 with rooms yield increasing 7.4 percent year on year, driven predominantly by average room rate. 

The increase in both commercial and leisure developments in Bristol will no doubt increase
demand for hotel accommodation in the city. However, whether there will be sufficient
demand to absorb the amount of new supply expected to enter the market over the next
three years is questionable. It is likely that occupancy levels and average rate will both
suffer due to increased competition particularly from the budget market, although the extent to which these are impacted will depend on whether all the planned developments go ahead.

© 2000 Arthur Andersen.