Apr 26, 2023
London Poised to Take Hotel Crown From Las Vegas
(Bloomberg) -- London’s hotels are on a major growth spurt.
The UK capital is on the cusp of becoming the city with the most hotel rooms in the world outside of China, taking the crown from Las Vegas.
With some megaproperties in the pipeline, London is expected to be able to offer 183,600 rooms in the next few years—a projected 18% increase from its current total, according to STR, a hotel market data company. Las Vegas, currently third behind world leaders Shanghai and Beijing, is looking at 8% growth, and Tokyo is at 3%, according to the count of projects that have been announced.
Of the 27,912 rooms counted by STR announced in London, 13,455 should be open by the end of 2025. There is no firm timeline for the remaining rooms, and hotel construction projects are frequently delayed.
Shanghai, with a population of more than 26 million, has about 346,000 hotel rooms, while Beijing has more than 323,500, according to STR.
When the British pound fell after Brexit, London suddenly became a much more affordable place for tourists to visit, and the historic city remains one of the most desirable destinations in the world. London limits short-term rentals such as Airbnb to 90 days a year, clearing away some competition for hotels.
Now, London hotels are doing better in some respects than before the Covid-19 pandemic. In December, for example, the average room was going for £207 ($258), 31% above pre-pandemic levels, though occupancy at 76.8% was slightly lower, according to STR.
“It is one of the key global cities and is always going to drive business,” said Thomas Emanuel, a senior director at STR. “The market continues to do incredibly well, even when times are difficult or economic circumstances are not great. London is always this beacon.”
Las Vegas, meanwhile, is constrained by its own success: Everyone wants to be on the famous strip, and there’s only so much real estate there. It’s only 4.2 miles long and is already highly developed with resorts and casinos.
London is in the middle of a luxury hotel boom. Some of the most highly anticipated hotels include the Peninsula London by Buckingham Palace, with 190 rooms, the Raffles London at the OWO (120 rooms), 1 Hotel Mayfair (181 rooms) and the Mandarin Oriental Mayfair with 50 rooms—all set to open in the next few months. A room at the Raffles, an elegant refurbishment of the Old War Office, starts at £1,100 ($1,365) per night.
Americans are expected to splash out on hotel stays when coming to town for King Charles II’s coronation, but locals have also been strong customers. “There’s strong domestic demand,” says Susannah Streeter, head of money and markets at Hargreaves Lansdown. “People dealing with the cost-of-living crisis here are coming to the capital rather than spending money abroad.”
One of the largest hotels in the works is a proposed hotel of more than 500 rooms at Vauxhall Cross Island towers, a mixed-use development designed by Zaha Hadid Architects. There are also megahotels that are stalwarts of the scene, like the Park Plaza Westminster Bridge and the Hilton London Metropole: Each has more than 1,000 bedrooms.
On the lower end, budget hotel chain Travelodge has announced plans to open 80 new hotels in the capital. Premier Inn has also been expanding: The chain recently opened a 393-room property at the Paddington Basin in central London, as well as a 400-key property in the financial district of Canary Wharf.
“London has the highest number of luxury hotels of any major city, including the largest number of iconic independent luxury hotels,” says Tim Hentschel, chief executive officer of HotelPlanner, saying he believes London sets the world standard in luxury service.
©2023 Bloomberg L.P.