Contrary to forecasts at the beginning of the year, London hotels achieved positive growth in 2015.
Despite a 4% increase in room supply and a significantly lower number of tourists visiting the capital in December, London hotels recorded a 2% year-on-year increase in profitability.
According to CBRE Hotels, this was mainly due to the “Rugby World Cup effect”, when, in October, demand for London hotels reached fever pitch and average room rates surpassed £160 per night – a 7.3% increase on the same period last year.
Joe Stather, CBRE Hotels intelligence manager, EMEA, said: “By Q3 2015, economic uncertainty in the key source markets of China and Russia, plus a 4% increase in new hotel stock throughout the year meant that the London hotel market was potentially facing negative growth by the end of 2015.
“In Q4, however, with over 2.5m visitors coming to the UK to watch the Rugby World Cup, and three out of the 13 rugby stadia being in the capital, there was an explosion in demand for London’s hotels, returning the sector to profitability by year end.”
Transaction activity in the market remained high rate throughout 2015 and appetite for investment into the sector remained keen into Q4 2015, which saw several notable deals, including the 203-room Regency Hotel in Kensington, which sold for more than £100m.
The fourth quarter also saw 12 new hotels commence trading, including the five-star InterContinental London, the O2 and London Hilton Bankside.
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