London | hotel market

Strong demand for top locations

Despite the crisis, the pipeline for new hotel construction in London is well filled.
IMAGO / Zuma Wire
Despite the crisis, the pipeline for new hotel construction in London is well filled.

Despite crises, London remains one of the top markets for hotel investment this year. Thus, according to recent studies, more than 100 hotels with around 18,000 rooms are in the process of implementation. But there are some uncertainties: the Brexit effects and the global consequences of the Corona pandemic. Tourism in the country is feeling these, and so is the metropolis.

For example, before the Corona crisis, London landed in the top 3 cities worldwide in the Global Destination Cities Index 2019 with 19 million visitors - behind Paris (19.1 million) and leader Bangkok (22.8 million). Moreover, the UK recorded a total of 41 million tourists in 2019. Last year, on the other hand, the number of visitors to the island nation slumped to around 11.1 million.

Despite all the uncertainties, investors such as family offices have seized the opportunity and, with an investment volume of more than 1.1 billion British pounds (GBP), were among the most active group of buyers last year. Overall, investment volume in the UK hotel market totalled GBP 1.8 billion (-70% compared to 2019). Of this, the London market still accounted for a total of £1.4 billion (-49% compared to 2019), according to analysis by Knight Frank. While overseas investment fell by 44% overall, Qatari, Israeli, US, Singaporean, Thai and European investors contributed around 63% to total UK investment.

According to surveys by Savills, hotel investment volumes across the country increased by 135 per cent to £1.70 billion in the first half of 2021, with 59 deals, compared to the previous six-month period (July-December 2020). Regional hotel investment continues to perform exceptionally well, underlining continued confidence in the recovery of the tourism sector, according to Tim Stoyle, head of UK hotels at Savills. In addition, he said demand for London properties remains strong and investors continue to be interested in properties in prime locations.

Figures still below pre-crisis levels

According to STR, occupancy rates at London hotels rose by almost 140 percent to 48.9 percent in July 2021. Average room rate (ADR) increased by 26 Percent to £195.57 and revenue per available room (RevPar) increased by 202 Percent to £51.65GBP year-on-year. However, the figures are all still well below pre-crisis levels.

According to Tophotelprojects, numerous new hotel projects, including some mixed-use concepts, are planned for the coming years. In total, the pipeline is said to amount to 109 projects with a total of 18,158 rooms. Of the properties, 41 hotels with 5,697 rooms will open their doors this year. Another 23 hotels with 3,798 rooms are expected to be completed in 2022, followed by another 11 projects with 2,136 rooms in 2023 and 34 openings with 6,527 rooms in 2024.

Among the fastest growing brands in the UK capital are tenacious Staycity Aparthotels, which is opening three serviced apartment properties with a total of 887rooms in the coming years, Hub by Premier Inn with 493 rooms and Hampton by Hilton with 465 rooms.

Exciting hotel projects by Hyatt and Pan Pacific

Among the most exciting projects is the Park Hyatt London River Thames - One Nine Elms. It is part of the One Nine Elms project, which will consist of two high-rise buildings. The 187-room property is set to launch in the fourth quarter of 2022 and will feature a luxury spa, ballroom and sky garden overlooking the city, among other amenities. Private apartments and affordable housing are also planned. In addition, Hyatt has launched Hyatt Place London City East in March 2021. It comprises 280 rooms and offers a flexible conference room concept.

Hotel projects until 2024
  • Staycity-Aparthotels with four projects with 1437 rooms
  • Hub by Premier Inn with 493 rooms
  • Hampton by Hilton with 465 rooms
  • Park Hyatt London River Thames with 187 rooms
  • Hyatt Place London City East with 280 rooms
  • Hotel by Pan Pacific in a 43-storey tower with 237 rooms and 160 private apartments

Later this year, the first European branch of the Pan Pacific hotel chain is set to debut in London. The hotel is located at One Bishopsgate Plaza, opposite Liverpool Street Station. The 43-storey tower is to offer 237 rooms, 160 private apartments and a large spa area with an 18-metre infinity pool, as well as the large landscaped outdoor area.

In addition, another project is planned by the Staycity Aparthotels Group. In addition to hotels at Heathrow, Covent Garden and Greenwich High Road, a 550-room hotel is to be built in the Blackfriars area of the city as part of a mixed-use tower block. The complex is also to include 227 apartments and 61 affordable homes.