Hotel, Sport & Leisure Tue, Mar 22, 2016 5:02 PM
London is one of the world’s leading financial and cultural centres exerting a powerful influence over worldwide commerce, politics, education, media, fashion and the arts, which all contribute to its status as a global city and prime leisure and business destination.
One of the great world cities, London benefits from a vibrant hotel market commensurate with the city’s international image. It is Europe’s business hub and is the most visited city in the world.
The capital appeals to both high spending business and leisure visitors as a result of the city’s continuing appeal as a cultural and commercial destination.
According to the International Passenger Survey (IPS) conducted by ONS across the full year of 2011, visits to the UK grew 2.9 per cent and earnings increased by 6.1 per cent over 2010, to reach a new record of £17.9 billion. Leisure visits rose 2.4 per cent from 11.7million to 12.0 million, another new record. Business visits rose 6.1 per cent to 7.2 million, and those to visit friends or relatives rose 4.9 per cent to 8.8 million. Quarter 4 2011 saw continued growth in business and visits to friends or relatives although holiday visits fell slightly by 2.6 per cent from quarter4 2010.
Knight Frank’s annual London hotel overview show that during the course of 2011 the UK hotel market demonstrated a continued improvement with a growth in Revenue Per Available Room (RevPAR) of 4.1% over 2010, mainly driven by a 3.8% growth in Average Room Rate (ARR). The level of demand, measured by AverageRoom Occupancy (ARO) remainedlargely unchanged.
As in previous years, the uplift in the operational performance of UK hotels was mainly driven by the strength of the London market which also saw profitability levels improving throughout the year.
Overall, London proved more resilient to the economic downturn than other UK centres and has performed significantly better than other European capitals during the global economic downturn. Overall, the main demand generating drivers in 2011 included a mix of sporting, cultural and political events such as London Fashion Week in February, the state visit by the US President Barack Obama in April, the RHS Chelsea Flower Show and the Champions League Final at Wembley in May. Compared to 2010, the capital’s hotels recorded a 6.1 % growth in profitability which was mainly driven by a 7.0% increase in ARR.
The capital recorded a second consecutive year of profitability growth in 2011 which was mainly driven by a strong operational performance during the second quarter of the year when London hotels attracted record breaking demand and achieved occupancy of 89.3% in June and 92.4% in July, complemented by record ARR’s.
The prospects for continued growth in the capital look strong. London & Partners, the official promotional organisation for London, forecasts that 2012 will be a bumper year for leisure tourism in the capital. The figures from Tourism Economics indicate that 12.7m overnight leisure visitors, both overseas and domestic, are expected to come and stay in London during 2012.
As well as helping to boost visitors to London in 2012, the much anticipated Olympic and Paralympic Games is estimated to expose London to an estimated global audience of 4 billion people. This is one of the factors that has resulted in forecasts for 2013 - 2015 being equally encouraging for London. The exposure through the Olympics is anticipated to help sustain 2012 levels of visits into 2013 and will then aid it to grow as much as 11% over the following two years, resulting in around 14.1m leisure visitors coming to the capital in 2015.
There have been several high profile hotel openings in 2011 and 2012 to date to including the W London, Leicester Square, Corinthia Hotel, 45 Park Lane, Bulgari Hotel and Renaissance St Pancras, all of which have added to the reputation of London as a top international destination. Other anticipated high profile openings include the InterContinental St James and the Shangri-La Hotel.
Transaction activity in London remains limited owing to the very restricted supply of available property andstrong underlying trading fundamentals. London’s relative resilience and the prospect of a sustained economic recovery make the capital one of the most sought after hotel property markets.
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