London, known as a ‘world in one city’, remains one of the most sought-after and popular tourism destinations on earth attracting over 26 million visitors each year from across the globe. And with growth at 5% per annum (International Passenger Survey Q1 2010) and over 500,000 extra visitors expected in 2012 due to the Summer Olympic and Paralympic Games, the outlook for London‘s tourism industry and confidence in London‘s hotel market, especially in the East of the city, is sky high.
PricewaterhouseCoopers’ (PwC) report on the Capital’s hotel market recently highlighted that London was the best performing city in Europe last year. In July 2011, hotel occupancy levels reached 92% according to PwC while demand is expected to outstrip supply next year particularly in Q3 2012 thanks to a combination of tourist attracting events including the Olympic Games and the Queen’s Diamond Jubilee celebrations. In fact, as demand soars PwC estimates that London‘s average room rate in Q3 2012 could reach £183 resulting in a growth increase of 36% for average room rates.
Ray Withers, Director of property investment expert’s Property Frontiers comments,
“The hotel market in London this year has been forecasted at near double digit growth while 2012 is expected to be a record breaking year for the hotel market. The London Plan, a guidance strategy for London formulated by the Mayor has incorporated an objective to provide an additional 50,000 hotel rooms between 2006 and 2026 while between 2010 and this year alone, over 5,000 new rooms have opened or re-opened in response to growing demand for accommodation.”
Indeed as demand sky rockets numerous hotel brands including Holiday Inn and Express have been popping up around the city, particularly in east London, fuelled not only by the new Olympic Park but also but the creation of new Special Enterprise Zones including the Royal Albert Dock, launch of Westfield shopping centre in Stratford and expansion of ExCel exhibition centre and London City Airport.
With tourists spending in excess of £9.3 billion a year in the city and a predicted increase in visitor numbers, new hotels in the east of London are a welcome addition with a very rare opportunity having emerged for investors to grab a piece of the action.