London’s Hotel Market Continues on Road to Recovery with 8.5% Growth Recorded in Q2 2010
London’s hotel market continues on the road to recovery post recession as the Deloitte Q2 2010 Hotel Market Outlook reports sustained growth in revPAR (revenue per available room).
An impressive 8.5% growth was recorded in Q2 2010, on par with the near double-digit growth of 9.6% seen in Q1 2010, with an average £102.27 generated per room per night.
Steven Worboys, MD of property investment experts Experience International, who are marketing rooms in phase 2 of the new West India Dock Road for which Holiday Inn has been selected to operate, comments:
“In line with growth in the UK economy (1.2% increase in GDP during Q2 2010), London’s hotel market is on the rise once again. The Capital continues to outperform major European cities including Madrid, Rome, Brussels, Berlin and Amsterdam with occupancy rates for Q2 reported at 82.7% and 80.3% forecast for 2010 as a whole.”
The positive start for the sector in the first half of 2010 is expected to continue with Deloitte predicting a 12.3% increase in revPAR in Q3 in part due to the Farnborough Air Show being held near London this July. Looking further ahead, in the run up to the London 2012 Summer Olympic Games, occupancy rates for 2011 are forecast at 77.7% and hotel prices set to double according to market intelligence company, Rubicon.
Steven Worboys concludes:
“The outlook for London’s hotel market over the next few years is very promising. The London Plan has outlined the need for some 50,000 additional hotel rooms in the Capital by 2026 and global chains such as Holiday Inn, the leading brand of the largest hotel operator in the world by number of rooms, InterContinental Hotels Group, have already committed to meeting this demand through being appointed as the operator of new, high quality and strategically located hotels such as the Holiday Inn West India Dock Road.”
Available at 19% below the official independent RICS commercial valuation and offering 10.7% net yields by year 5, the Holiday Inn West India Dock Road, located adjacent to Westferry DLR, will offer high quality rooms and a number of executive suites. In addition guests can enjoy first class on-site facilities including the restaurant, café, bar, gym and 300 sqm of conference space.
Occupancy rates are forecasted conservatively at 70% in year 1, rising to 80% from year 2 onwards and revPAR is expected to reach £98 in year 5. Phase 1 sold out earlier this year within 4 weeks but investors can now purchase units in the newly released Phase 2 from £189,000 with non-status finance available.