Affluent overseas tourists are driving the number of new luxury hotels in London, with 210 new properties currently in the development pipeline for the capital according to private wealth law firm Boodle Hatfield.
Out of the hotels with planning permission, or already under construction, across the capital, almost a quarter (48) of these are in Westminster, adding over 6,800 new guest rooms. A further 12 are in the Heathrow area.
The firm said that the pipeline of new hotels being planned shows investors “remain optimistic” about the London market’s potential for growth post-Brexit.
It added the UK’s hotel market is one of the few sectors of the UK economy to have benefited from the “Brexit-related slump” in Sterling. The decrease in value of the pound has made it cheaper for international tourists to visit the UK and has also encouraged more “staycations”.
The luxury (four and five stars) hotel segment, often focused in Westminster, has attracted visitors from the US and the Gulf, who are among the highest spending tourists.
Boodles Hatfield said tourism from the Gulf to the UK rose in 2018, with 675,000 visits to the UK from Kuwait, Qatar, Saudi Arabia and the UAE collectively, up 20% from January 1 2014 to the end of 2018. Visits from the US to the UK grew 30% over the same period to 3.88m (VisitBritian).
Luxury and boutique hotels now account for 74% of the planned new hotels in Westminster. The development of luxury hotels in London is also partly driven by flows of foreign capital into the sector.
Rajeev Joshi, partner at Boodle Hatfield, said: “Investor appetite in the London hotel market is holding up. But investors will want to know that this new supply of hotels can be soaked up by increasing demand.
“For tourism to continue to grow, the UK needs to ensure that post-Brexit, we do not start to be seen as a less convenient destination for tourists from the EU or from further afield.”
He added: “Greater investment in infrastructure will be a key part of this. Accelerating the delivery of projects such as the third runway at Heathrow and the Crossrail would help.”