London’s budget hotel sector has experienced significant growth since the city hosted the Olympic Games, a new report reveals, with over half of the 18,000 hotel rooms that have opened since 2012 being in the budget sector.
Low-cost hotels now make up 20% of the total room stock across the city.
Traditionally investment in hotels in London has focused around central areas, however, a report by property consultant JLL and London & Partners, the Mayor of London’s promotional company, shows that high rents and values in the West End are leading to the expansion of traditional boundaries.
New infrastructure improvements and a booming digital economy has created a ‘Knowledge Corridor’ that stretches from Bloomsbury to Paddington, taking in Fitzrovia and North of Oxford Street. Hotel activity is increasing as these areas grow, with Premier Inn opening another hotel on Tottenham Court Road this year and US-based hotel operator Standard International opening its first hotel in 2018 in the former Camden Town Hall.
Shoreditch has also become a hotspot for hotel development due to building availability and lower costs compared to more central locations with new hotels including Z Hotels and Nobu Hotel Shoreditch.
The report shows that London dominates investment across Europe’s hotel sector with the capital attracting 36% of total investment.
London & Partners chief executive Gordon Innes said: “The hotel industry is a vital part of London’s booming tourism economy, which is now worth £36bn and supports hundreds of thousands of jobs…It’s encouraging to see the hotel sector growing and bringing exciting new developments to visitors.”
Graham Craggs, MD in JLL’s Hotels & Hospitality Group, described 2015 as an “exceptionally strong year in terms of hotel transactions in London” and he predicted activity would remain high in 2016.
“Underlying market fundamentals continue to be positive and the outlook for hotel performance in London is good.”
New hotel development is being encouraged within the City of London, Westminster, the eastern edge of the Royal Borough of Kensington & Chelsea, southern parts of Camden, Islington, the ‘city fringe’ edges of Hackney and Tower Hamlets; and the Northern parts of Southwark, Lambeth and Wandsworth.
Tracy Halliwell MBE, director of business tourism and major events at London & Partners, told CN: “London’s appeal as a business destination is growing, with the city welcoming 3.7m business visits in 2015, 13% more than the previous year. The hotel industry is a crucial part of supporting the capital as an attractive proposition for meetings and events planners and we are confident that these new properties will be great new additions to London’s offer, both in terms of accommodation and new venues.”