London hotel market increases by 33% ahead of 2012 Olympic Games: PwC


The luxury hotel market in London, host to the Olympic Games from 27 July to 12 August 2012, has increased by 33% since the games were announced, according to research by PricewaterhouseCoopers (PwC).

The global accountancy firm said the budget sector had also increased its presence with a 60% increase in room supply.

PwC head of hospitality and leisure research Liz Hall said London is at the top of its game and the investments made in new hotels and improving existing ones would leave a strong legacy.

"However, such a large supply spike against an uncertain economic and travel environment is likely to mean a tougher competitive outlook," Hall added.

The real average daily rate (ADR) of London hotels in 2012 is expected to increase by 13% compared with 2005, and the revenue per available room (RevPAR) is set to rise by 29% over the same period.

Occupancy levels, which stood at 74% in 2005, are set to rise to 84%.

The five-star / luxury segment, which had 11,430 rooms in 2005, is expected to see a total of 15,220 rooms in 2012, while the budget segment will have 26,000 rooms in 2012, up from 16,300 rooms in 2005.

"The challenge for hoteliers will be to make a mark for themselves in a highly competitive market when the euphoria of the games wears off."

Encouraged by the global awareness of the English capital as a destination along with the boost to its infrastructure, many operators are optimistic about London's prospects after the games.

Concerns were, however, voiced about the supply spike and the way it will be absorbed.

Trading may get very difficult, especially in East London, if there is a post-games travel dip, PwC noted.

After the event, the challenge for hoteliers in London will be to make a mark for themselves in a highly competitive market when the euphoria of the games wears off.