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London hoteliers have reported positive growth in 2015 contrary to forecasts at the beginning of the year, according to CBRE.
The estate agency firm said that, despite a 4% increase in room supply and a significantly lower number of Christmas tourists visiting the capital in December, London hotels recorded a 2% year-on-year increase in profitability.
According to CBRE, this was mainly due to the Rugby World Cup effect, in which demand for London hotels soared in October as average room rates surpassed £160 – a 7.3% increase on 2014.
Joe Stather, the firm’s hotels intelligence manager for Europe the Middle East and Asia, said: “By Q3 2015, economic uncertainty in the key source markets of China and Russia, plus a 4% increase in new hotel stock throughout the year meant that the London Hotel market was potentially facing negative growth by the end of 2015.
“In Q4 however, with over 2.5 million visitors coming to the UK to watch the Rugby World Cup, and three out of the 13 rugby stadia being in the capital, there was an explosion in demand for London’s hotels, returning the sector to profitability by year-end.”
Meanwhile, transaction activity continued at a high rate across the year as appetite for investment into the sector remained strong in the year’s final quarter. Several notable deals in the last quarter included 203-room Regency Hotel in Kensington that sold in excess of £100m.
The fourth quarter also saw 12 new properties commence trading, including the five-star InterContinental London – The O2 and the London Hilton Bankside.
