cheaper than it was in 2008,” says a spokesperson from NYC & Company, the city’s official marketing organisation. Buyers can be forgiven for hoping that the rash of new openings in London, which will put New York’s projection of 36 in 30 months into the shade, will bring down rates once Olympic flame is extinguished.
IN DEMAND Don’t hold your breath, however, if you heed the views of those who know the market. Robert Flinter, general manager of Apex City of London Hotel, has worked in the capital for 12 years. He believes demand will continue to grow as we come out of recession and points out
that London is more accessible than some comparable cities.
“The feeling is that next year London
won’t suffer the same post-Olympic slump that other cities did because it is so accessible,” he says. Any drop in rates, he believes, will only come if a new West End premium property starts to buy its way into the market,
Buyers can be forgiven for hoping that the rash of openings in London will bring down rates after the Olympics
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but he adds: “I don’t believe the market will go that way.” Flinter concedes some properties might offer room for negotiation because of the increased supply, but only in return for a bigger share of a buyer’s spend. Nor does he believe the budget sector’s explosion will have a huge impact on business rates, which he adds have been largely flat since 2008. “You can’t say: ‘I want a cheaper rate because there’s a Travelodge opening next door,’” he says. “I’m not going to compete in that market, but some hotels might be forced to add in free wifi or food and beverage discounts to make the package more attractive.” Another London veteran, Stuart Johnson, manager of Mayfair’s
THE ACCOUNTANT’S VIEW THE “BLIP” OF THE OLYMPICS will
rescue what would otherwise have been a poor year for the capital’s hotels, according to
accountants PricewaterhouseCoopers (PwC). The firm estimates that low GDP growth in the
UK and the eurozone crisis will affect performance of the UK hotel sector, but that the Games will effectively rescue the capital’s performance. PwC expects record average London occupancy
this year of 84 per cent, the highest since the 1970s, but as Liz Hall, PwC’s head of hospitality and leisure research, explains, this figure has been creeping up annually. “It is a record, but it didn’t take much to tip it into a record,” she says. PwC estimates London’s Q3 room rates, which includes the Games period, will rise almost 15 per cent to an average daily rate of £156.20 and that the capital’s hotel occupancy rate will peak at nearly 92 per cent. This, PwC believes, will help offset Q4, which it says will be “challenging”, with forecasts of small declines in rates and occupancy. Come the autumn, the picture will be clearer. “The big question is will there be pent-up demand for meetings and conferences, or have they already been moved elsewhere?” says Hall. “It is going to be a difficult year in the shoulder period, but Q3 is going to be pretty busy.” Looking ahead, PwC’s estimate is that the
capital’s building boom will affect prices, but perhaps not immediately. PwC estimates that around 2,400 rooms have been added to London’s inventory every year for the past decade. This year, it believes there will be an extra 6,600 rooms added to the total and, next year, another 2,600 on top of the normal increase. “I would have thought supply and demand is
going to affect rates at some point,” said Hall. She has “a few concerns” about 2013, but once again, buyers should not get excited about tumbling prices. “In our best case scenario, we see rates coming down 2-3 per cent next year, which still leaves them pretty high.” PwC’s estimate is that almost half the total 2012 pipeline of new hotel builds in the central London zone are budget brands. It says that in north and south London it is 100 per cent, in east London 51 per cent and in west London, 41 per cent. The impact of this may be some years away,
however, Hall believes. “London does tend to absorb all these new rooms very well, but you do get a period that is a bit out of sync. We might see that in 2013. It’s happened everywhere else in new Olympic cities and it’s always dangerous to say that anywhere is different.”