Record occupancy drives London hotel development

New data compiled by London & Partners and AM:PM suggests that the number of hotel rooms in London is expected to grow by 12 percent over the next three years, with the increase driven by the growth of budget and five-star hotels across the capital. These new properties and hotel extensions will add 17,769 more rooms across the capital over the same period, up from the current figure of 138,769.

By the Numbers
The data, released to coincide with IBTM World in Barcelona this week, show that 43 budget properties are expected to open by the end of 2018, with low-cost properties in the city predicted to increase by 29 percent over the next three years. Over the coming three years, 19 five-star properties will also open in the capital, increasing the hotel stock in this category by 22 percent.

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Rising business and leisure visitor numbers for London have driven record occupancy levels across the city’s hotels. London occupancies have averaged 80 percent or above since 2006, according to PwC and their UK hotels forecast 2016 predicts a decade high of 84 percent this year, with the Rugby World Cup in the fall providing a further boost for both occupancy and ADR. STR Global noted that two National Football League games also helped drive rates, as did the large-scale Helitech International and TabExpo events. PwC projects a further increase to 85 percent occupancy for London’s hotels in 2016. 

RELATED: Why London is seeing an influx of luxury investment

STR Global’s preliminary October data for London indicate significant increases in several key performance metrics. Based on daily data from October, London reported:

  • increases in supply (+1.8 percent) and demand (+2.2 percent);
  • a 0.4 percent increase in occupancy to 87.8 percent;
  • an 11.9 percent increase in average daily rate to £159.29; and
  • a 12.3 percent increase in revenue per available room to £139.79.

Supply growth in London had outpaced demand in each of the previous two months.

What's Opening Where
Alan Gordon, director of AM:PM, noted several neighborhoods attracting attention from investors and developers, including Aldgate, Shoreditch, Vauxhall and Whitechapel. Several brands, he said, are making their UK debut.

Between 2010 and 2014, there was a 18.9 percent increase in London's room supply, and the city continues to see increasing hotel openings to cater for this demand. New luxury hotels opening in 2016 will include the InterContinental London – The O2, the Four Seasons Hotel London at Ten Trinity Square and The Curtain Hotel and Members Club Shoreditch. 

Nobu’s first London hotel will have 143 guestrooms, a so-called "statement restaurant" and a private garden. Park Plaza Hotels & Resorts will open two London properties in 2016: the Park Plaza London Waterloo and the Park Plaza Park Royal hotel in west London.

Greg Hegarty, regional general manager UK, PPHE Hotel Group, noted that his company has just signed a hotel management agreement with Battersea Power Station Development Company to open a new hotel under the art’otel brand. InterContinental Hotels Group, meanwhile, has signed the new-build Hotel Indigo London – Aldgate to operate under a franchise agreement with Meadow Partners and Roquebrook. 

New budget hotels for the city will include eight new Travelodge hotels including London Richmond Central and London Finsbury Park. Premier Inn is also expected to open three properties during 2016, including London Sidcup, London Archway and the hub by Premier Inn at London Spitalfields, Brick Lane Hotel.