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More than half of the 18,000 hotel rooms that have opened in London since 2012 have been in the budget sector, new research has revealed.
The London Hotel Development Monitor, from property consultants JLL and London & Partners, said the capital’s budget hotel sector has experienced “significant growth” since the city hosted the 2012 Olympic Games.
The report said 33% of the 7,000 room due for completion this year will be in the same sector and claimed low-cost hotels now make up 20% of the total room stock across London.
New infrastructure improvements and a booming digital economy has created a “knowledge corridor” that stretches from Bloomsbury to Paddington, taking in Fitzrovia and North of Oxford Street.
The report said hotel activity is increasing as these areas grow, with Premier Inn opening another hotel on Tottenham Court Road this year and US-based hotel operator Standard International set to open its first hotel in 2018 in the former Camden Town Hall.
It said Shoreditch has also become a hotspot for hotel development due to building availability and lower costs compared with more central locations with new hotels including Z Hotels and Nobu Hotel Shoreditch set to open.
During 2016, a further 800 rooms are expected to open in Shoreditch.
Meanwhile, the report shows that London dominated investment across Europe’s hotel sector with the capital attracting 36% of total investment.
Graham Craggs, managing director at JLL’s hotels and hospitality division, said: “2015 was an exceptionally strong year in terms of hotel transactions in London. Activity will remain high in 2016 and we expect the trend will shift towards single asset transactions.
“Underlying market fundamentals continue to be positive and the outlook for hotel performance in London is good.”
Gordon Innes, chief executive of London & Partners, added: “The hotel industry is a vital part of London’s booming tourism economy, which is now worth £36bn and supports hundreds of thousands of jobs, many of which are widely accessible.
“As more and more visitors come and explore our great city, it’s encouraging to see the hotel sector growing and bringing exciting new developments [for] visitors.”
