London hotel investment is set to soar to record high in 2020 | How to compete in a competitive market

03rd February 2020

Written by Julie Grieve, Founder and CEO of Criton

London serviced apartments

In the photo: Cheval Three Quays in central London

It’s here.  It’s not just a new year, but a whole new decade.  Since December you’ve likely been inundated with analysis of the last year, predictions and statistics; but what does it all actually mean?  Although a relatively small country, the UK recognises differences across its regions and it’s important to see ‘what’s in it for you’ and your business.  In the first of a series, we take a dive into the London marketplace and look at what’s predicted by the industry for the 12 months ahead.

This year London will benefit with the introduction of a number of new hotel openings, and will welcome nearly 8,000 new hotel rooms across 65 hotels, marking the largest number of hotel openings in any one year to date (source). In addition to the 159,000 rooms currently available in the capital city, is there enough demand to put heads on all those beds?  The range in accommodation offering has also never been greater with 31% of hotels now ranked as 4-star and 26% classed as ‘budget’. That, coupled with over 80,000 Vacation Rental listings via companies such as AirBnb for London, competing for guests has never been so important.  

Many new projects which have launched or about to, are from inward investment from overseas.  From North America recent hotel openings include The Standard (it’s first European hotel) and the Hard Rock Hotel.  This year the city will welcome the Hilton’s first LXR Hotels & Resorts brand hotel in the Biltmore Hotel and Japan’s Prince Hotels will launch The Prince Akotoki, a design-led property.  A new 350-bed 5-star Edwardian hotel (The Londoner) will open later this year, with Rosewood opening a new luxury hotel on the former site of the US Embassy in Grosvenor Square (source).  

The key takeaway from all these new openings is that they’re heavily focused on the luxury hotelier market.  Making sure your business stands out from the crowd is critical. With the introduction of so much into the supply chain it’s important that we look at what impact that will have on firstly on ADR and secondly on RevPAR.  

In September last year the team at PWC updated their growth predictions for the industry in 2019/2020.  At a time of extreme uncertainty across UK and global politics (Brexit aside), there has never been such a cautious outlook from the agency.  In the capital they predict occupancy could fall by 0.3%, but RevPAR may increase marginally by 1% in 2020. As a comparison, as anticipated, this is ahead of a regional prediction which forecasts a 0.6% fall in occupancy and 0.3% fall in RevPAR.  

ADR may grow to 1.3% in London (£153.4) this year, with the UEFA EURO 2020 Championship likely to have an impact.  Sporting events are globally recognised as driving an increase in ADR with the London 2012 Olympic Games (5.5% ADR growth) one of the largest to date.  

So what does this all mean for you?  It’s important to keep on top of industry predictions and look at what changes or considerations you need to undertake as a business.  We can’t do everything(!) so we need to focus on incremental changes that can have the biggest impact on our competitiveness and our ability to differentiate. 

Sustainability, staffing, revenue management, marketing and technology all play a part in this; and that’s where Criton can help.  We enable hoteliers to maximise guest spend, by simplifying digital transformation and delivering the perfect digital guest journey.  Find out more about our predictions on 2020 trends and how we can support your business here.

London hotel room pipeline for 2020 STR PwC analysis 2019

How Criton can help you

Criton is an award-winning technology provider which enables hotels and serviced apartment operators to take the guest experience to the next level with a sophisticated mobile app. Criton helps hotels to streamline the entire guest journey and maximise in-stay revenue. Get in touch today to find out how we can help your business. 

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