Europe -  London

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London has developed into one of the world’s leading business, financial and cultural centres, and the city’s influence on politics, education, media, fashion, and arts contributes to its status as a major global city. As the biggest financial hub in Europe, and with its rich cultural heritage, London benefits from both leisure and business demand.

After the pound sterling depreciated significantly against the euro in 2016 following the EU referendum in June, London benefitted from increased leisure travel from source markets such as the USA and Europe. However, that was counterbalanced by decreased business activity due to the uncertainty in the market. Up until the negotiations for the withdrawal agreement were concluded in December 2020, the market experienced some uncertainty in terms of investment activity but also on the free movement of people, as this economic freedom largely impacts payroll costs of UK hotels and accessibility of each other’s markets to UK and European investors.

During 2018, occupancy levels increased and allowed London to finish the year with its highest annual occupancy level of the past decade, despite a slight dip in international arrivals. In 2019, arrival figures grew again to similar levels achieved in 2017 (approx. 34 million), while occupancy remained stable and average rate gained nearly 3% compared to 2018. Arrivals grew at an annual compound growth rate of 6.1% between 2010 to 2019, driven by domestic and international visitation alike. Like most other European cities, London experienced a severe decline in 2020 owing to the impact of COVID-19, resulting in a RevPAR decline of more than three-quarters of its 2019 level. Demand started to strongly recover from the summer of 2021 with the easing of international travel restrictions. However, performance remained below pre-pandemic levels overall, with RevPAR standing at 35% of its 2019 level owing to the lack of international demand and large events.

Supply in London currently stands at close to 1,500 properties comprising almost 138,000 rooms. There are currently more than 80 properties in the pipeline for London, all expected to open by 2025, an increase of 5.3% on current supply. These hotels will bring nearly 13,000 new rooms to the market. Some prominent new openings include the 189-room Peninsula hotel and the 137-room Rosewood at Grosvenor Square, both set to open in early 2023 and 2024, respectively, although further delay may occur.

Transaction levels in London, like most other European cities, was subdued in 2020. However, investment activity and the number of transactions in London started to increase throughout the second half of 2021. The most notable transactions were the sale of a partial interest in both the 646-room Park Plaza Riverbank Hotel for a reported €306 million (€474,000 per key) and the 343-room art’otel London Hoxton for a reported €325 million (€948,000 per key). London was one of the most active European cities in terms of transactions during 2021.

London hotel values increased by 5.8% in euro terms and 2.2% in local currency in 2021, as reported in our 2022 European Hotel Valuation Index.

Change In Value For Market: (€Euro)

Legend
Significant Value Increase: Greater than +10%
Moderate Value Increase: Between +3% and +10%
Stable Values: Between -3% and +3%
Moderate Value Decline: Between -3% and -10%
Significant Value Decline: More than -10%

For more information, please contact:

Sophie Perret, MRICS, MBA

[email protected]
  • +44 20 7878 7722 (w)
Nikola Miljković

[email protected]
  • +44 20 7878-7724 (w)
  • +44 7 593572865 (m)
Mathilde De Bona

[email protected]