What recession? London hotels boast highest occupancy rate of any Olympic host city

By Luke Nicholls

- Last updated on GMT

Related tags: Hotel, Olympic games, London

Hotels in London are at their RevPAR peak, which stood at £110.61 in the 12 months to March 2012
Hotels in London are at their RevPAR peak, which stood at £110.61 in the 12 months to March 2012
With London bracing itself for a bumper summer, packed full of once-in-a-lifetime events including the Queen’s Diamond Jubilee and the 2012 Olympics, the city’s hotel market is booming, with the highest occupancy base of all time for any host city of the Games. 

That was the overwhelming message from hotel analysts STR Global and HVS London at the Boutique Hotel Summit on Monday, in a co-presentation of a European hotel market research paper.

“London really has had a phenomenal number of years and it actually appears as if the capital hasn’t had a recession,” said Sarah Duignan, director of account management at STR. “The city performs very differently to any other market internationally, especially given the economic downturn.

“The previous RevPAR (revenue per available room) peak was back in August 2008, when we sat at £100.46 across the city. In the 12 months to March 2012, we’ve exceeded that by over £10 – to a whopping £110.61.

“Supply has also increased, by 15 per cent in the 12 months to March 2012. A lot of that’s for the Olympics and a lot of it is also at the top end, with the likes of W Hotel and Carinthia to name a few. Last year, London closed with an occupancy rate of 82.5 per cent. So the city is in a really good position – it has the highest occupancy base of all time for any host city of the Olympics.”

Transactions, developments, openings

Tim Smith, director of HVS London, echoed Duignan’s outlook for London, but extended the sense of positivity into the regions as well, particularly when it comes to hotel transactions, developments and openings.

“It’s usually perceived nowadays that London is a bubble and the rest is a struggle,” said Smith. “But hoteliers being the savvy, connected, driven people that they are, have found a way of funding new hotel openings in the regions.

“I absolutely agree that the banking sector is not supporting development of real estate throughout the UK. But I’m delighted to say that there have been a lot more transactions, developments and new openings since this time last year, right across the UK. Various brands have come over to London from the states, including Thompson, Belgraves and Manchester Square fire station.”

“The future looks just as good. Numerous examples show that people are still prepared to buy good quality assets, at a reasonable price, throughout the market. If you’ve got passion for the design and for the hotel itself, you can sell it, people will want it.”

Other statistics revealed in the presentation include:

  • Regional UK supply has increased by 21 per cent in the 12 months to March.
  • RevPAR for the regions was at an average of £41.37.
  • Over the past five years, the UK has seen an increase in supply of just over 20 per cent.
  • The number of rooms available across the UK has increased from 91.5 million rooms in 2008 to 104.5 million this year - an increase in over 13 million rooms in the UK market.
  • Even with the above increase, the average occupancy rate across the UK has remained flat.

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