London hotel market uplift predicted

Visit London is forecasting significant hotel growth levels this year in the capital, following a subdued 2006. According to its latest Hotel Development Monitor findings, the quarterly report that tracks the hotel market across London, interest from developers in the city has remained exceptionally strong, despite relatively slow hotel growth last year. “Solid demand fundamentals and little oversupply risk, coupled with strong investor interest is driving much of this activity,” said Visit London business analyst, Jamie Talmage. “Overall 2,700 new rooms are set to open in 2007, the majority will be during the second half of the year, with budget and 4 Star dominating.” The Development Monitor’s 10 predictions for 2007 are: 1. Pick-up in new supply growth: new build completions are likely to increase relatively steeply this year, with some 2,700 new rooms expected to open. 2. King’s Cross and Wembley: the opening of the Channel Tunnel Rail Link and the new Wembley Stadium will result in both locations becoming increasingly popular with developers and operators. 3. Increasing segmentation: Boutique brands and new types of hotel like Yotel’s cabin concept are adding to the traditional market segments such as budget and luxury. 4. Brands: increased brand penetration across all market segments. A number of new brands from major operators introduced into the London market. 5. Apartment hotels: growth in serviced apartment accommodation. 6. Bottom line growth: although London occupancy and room rates should continue to grow, increasing costs will impact bottom line growth. 7. Investor interest: demand for hotel assets to remain very strong on the back of Private Equity interest, cash rich firms and Individuals, and property funds. 8. Development costs: hotel development costs to increase steeply reflecting competition for prime sites and rising construction costs. 9. Planning powers: Mayor Ken Livingstone to be granted extended powers to veto or permit major strategic planning applications in the capital. 10. Major events in London: events such as the Grand Depart of the Tour de France and the USA’s first NFL league game out of the Americas, will drive London’s reputation.

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