Home suite home: Old seaside hotels are being turned into luxury flats

They're providing unique opportunities for investors andfirst-time buyers alike. Graham Norwood gives his star rating

Even the most cursory glimpse at the local press in the past few weeks will reveal a significant new trend in British housing. "Green Light for Stansted hotel conversion," says the Saffron Walden Reporter. "Solution in sight for hotel conversion," is the Suffolk Evening Star headline. "Bid to Block hotel conversion fails," reports The Cornishman.

You get the picture – across the country, hotels are being converted into homes. In many cases they make distinctive properties with unusual characteristics. Converted hotels are often large, have more bathrooms than comparably-sized homes and may even have eccentric features, such as ballrooms or grand entrances. Others rely on fabulous locations, such as the former Torcross Hotel now being converted to 15 apartments and three cottages on Slapton Sands – one of the most beautiful locations in south Devon.

"There are real advantages to it having been a hotel in the past," explains Peter MacIlvenny, who owns an apartment in the building with his wife Rosie. "Its location is absolutely on the seafront so there's only sand and water ahead of it – no modern home could get so close. It's also extremely well-constructed into the rockface behind, which is testimony to how large hotels were built in the 19th century. Something modern or anything smaller wouldn't have quite such a feeling of solidness," he says.

Prices of remaining homes at the scheme are – at least by seafront standards – relatively modest, at £250,000 to £460,000 (Knight Frank, www.knightfrank.com).

There are other physical advantages to former hotels. Larger ones, for example, are split into multiple homes when converted, allowing people to buy into a style of property their budget would not normally allow. Hunsdon Manor at Ross-on-Wye in Herefordshire is one fine example, built in the early 19th century and run as a hotel. Now it is two homes, on sale together for a cool £1.25m (Fox Grant, 01531 637341, www.foxgrantledbury.com).

Even more flamboyant is London's former Halcyon Hotel. In the 1990s it was a celebrity hotel haunt near Notting Hill – Mick Jagger, Liza Minnelli, Monica Lewinsky, Robert de Niro and Yoko Ono stayed there. Now a two-bedroom flat there is for sale for an extraordinary £3.85m (Knight Frank, www.knightfrank.com). For those wanting a hotel to provide an entire house, and at a more reasonable price, Dunraven Lodge at Strathpeffer in Ross-shire has been converted from a small hotel to a family home. It has six bedrooms, six bathrooms and landscaped grounds (£595,000 from Strutt & Parker, www.struttandparker.com).

So why is there such a glut of former hotels on the market?

There are three reasons, according to Philip Hamlyn, a London-based independent consultant who advises the hotel industry on business strategy. The first is perhaps the most obvious. "Selling a property with planning consent to become, say, five homes is far more valuable than selling an old hotel needing expensive updating to stand even a small chance of running as a viable business," Hamlyn warns.

"Secondly, legal requirements of running a hotel – fire standards, kitchen health and safety and the like – are stricter than ever before and some buildings are so old they cannot realistically be upgraded.

Finally, expectations have changed. Today's younger clients want high levels of comfort in a very relaxed, casual atmosphere which doesn't chime with some of the old oak-panelled hotels that you find, especially in the country," he says.

That latter point is why, in popular holiday areas, many hotels have been lost, often to the consternation of tourist boards. "A lot of small and mid-size hotels in the south-west, for example, have been family-owned for several generations.

"They have been accustomed to being very formal but that market now is really only wanted by pensioners who visit. Younger, trendier people want something very different. The hotel buildings and the people running them aren't necessarily able to adapt to that new market," explains Nicola Oddy, a buying agent working in Cornwall for Stacks Property Search.

She says there are disadvantages to hotel conversions. Some are turned into small apartments because the developer needs a larger number of units to justify the cost of the conversion.

"Quite often these older hotels, especially if they are centrally located in a town or village, have almost no parking. That's not attractive to a potential developer and if a conversion does happen, it's not a selling point for the individual homes," cautions Oddy.

Several local councils have been less than enthusiastic about the trend, too, refusing planning consent for conversions and then having decisions overturned on appeal.

For example, last month an 18th-century hotel, the Londesborough Arms in Market Weighton, was given consent to be partly-converted to flats after four previous attempts at conversion were rejected by the council, which was concerned ata possible shortage of hotel beds in the area.

But where conversions have taken place, the results have often been outstandingly attractive and have arguably been the only realistic option for large period buildings, which otherwise may have faced the wrecking ball.

For example, the Grand Ocean hotel at sleepy Saltdean, East Sussex, was built in 1938 in typical Art Deco style – Bette Davis stayed there and it is easy to imagine her sashaying down its impressive lobby staircase. But then it became a Butlins camp, before falling derelict. It became an eyesore for the local community and was tipped for demolition until a development company, Explore Living, spotted it almost five years ago and won planning consent for conversion into 280 apartments, some of which are still on sale (£179,995 to £545,995, 0845 6036273, www.exploreliving.co.uk).

The company believes its restoration of the classic appearance of the building pays off in terms of attracting buyers. "I instantly fell in love with the development," says one purchaser, local doctor and first time buyer, Priyanka Saran.

The conversion trend, even during the economic recession, has been a windfall, not only for those selling hotels but for one other group, too – those hoteliers not selling.

Survival of the fittest

As a result of the drop in British hotel bed numbers, occupancy rates for surviving establishments have risen, according to an annual survey by the accountancy firm PKF.

Its 2010 results, out this month, show that occupancy rates in London were typically 82.7 per cent, up 1.7 per cent on 2009, while elsewhere in the UK they hit 70.5 per cent, up 3.1 per cent.

"Closure as a hotel and conversion into apartments isn't always a bad thing," says Philip Hamlyn.

"It sometimes drives out those unwilling to keep up with modern hotel trends, and it provides a bonus in the shape of some very unusual homes."