London hoteliers are bracing for the biggest opening of luxury rooms in more than a decade this year, but concerns are growing about oversupply and price cuts in a competitive market.
The 146-room Chancery Rosewood is set to open in the summer at the former US Embassy in Grosvenor Square, while Six Senses is expected to open a new hotel in the former Whiteleys department store in Bayswater in late 2025.
Around the same time, luxury hotel operator Auberge Resorts Collection opened the 102-room Cambridge House in the former In-N-Out naval club in Mayfair, with other openings planned across the city. Masu.
The rush comes after the 2024 opening of the 50-room Mandarin Oriental Mayfair and Park Hyatt London River Thames, as well as renovation projects at The Savoy on Park Lane and the London Hilton.
The openings will result in 757 new luxury hotel rooms in Greater London in 2025, the biggest annual increase since 2014, according to property group Savills’ analysis of figures from data provider AM:PM Hotels. That’s what it means. The total number of luxury hotel rooms will increase by 4% to 19,535 rooms.
“Overall, demand in London is weak, but offers[in the city]are increasing. So it’s a perfect storm,” said Maybourne, who owns Claridge’s, where the average daily rate is £1,800. said Gianluca Muzzi, co-chief executive officer of the hotel group.
Maybourne co-chief executive Mark Socker said last year that “a number of things could have stopped people from coming to London,” citing the Paris Olympics and the UK government’s refusal to reinstate duty-free shopping. ” he said.
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Frank Arnold, managing director of the Savoy, said the five-star hotel was forced to reduce its daily room rates to below £1,000 in 2024 after occupancy fell by 5 percentage points in the first quarter. said.
He added that London’s supply continues to grow at “a rate never seen before” and there is a risk of “some dilution of demand”.
Luxury hotels around the world have particularly benefited from the post-pandemic travel boom, and London is no exception.
According to AM:PM, luxury hotels in the UK capital account for around 16% of the total hotel rooms of more than 110,000 rooms. According to CBRE, average daily room rates rose 42% from 2019 to 2023, compared to a 27% rise in the overall London market over the same period.
Estate agents have found that the sector is attracting wealthy tourists from the US and the Middle East, with King Charles’ coronation in May 2023 providing a further boost.
Kenneth Hutton, head of European hotels at CBRE, said while Paris and Milan, which offer international travelers VAT-free shopping, had seen similar daily rate increases, “London is one of the largest in Europe. By far the most visited city, I feel very good about London’s luxury sector.
He added that demand is being supported by a growing number of “high-net-worth individuals” around the world with net worth of more than $1 million.
“Luxury hotels that stand the test of time will be able to maintain their room rates and accept slightly lower occupancy rates,” Hutton said, adding that ultimately their performance will “up”.
“‘Fear’ of oversupply is the wrong word,” said Richard Cook, general manager of Mayfair’s Browns Hotel, London’s oldest hotel. . . I recognized what was going on (and) what had to change. Because we know it’s coming. ”
Built in 1832 and owned by Sir Rocco Forte, the five-star flagship hotel has recently undergone a series of renovations, including the unveiling of new suites by British fashion designer Paul Smith, whose furniture guests can purchase. Masu. A new spa and renovated fitness space will open within the next 18 months.
Cook said the changes are aimed at “improving the experience that engages our guests,” but “at a time when there is too much supply and not enough demand.” . . “Prices will definitely change,” he said, calling for the reinstatement of VAT-free shopping, which was abolished in 2021.
Britain’s Treasury, which had described duty-free shopping as an expensive scheme before scrapping the scheme, said in a statement to the Financial Times that it had “no plans” to introduce a new framework in the UK.
Marie Hickey, director of commercial research at Savills, said luxury hotel openings had increased over the past few years, but suites were limited in London compared to rival cities such as Paris, so providers were He said he is focusing on it.
When it comes to luxury goods, he said, “I don’t think (opening stores) will have a negative impact (on the market) because it will only increase the average daily rate.”
But in the short term, hoteliers will weather increased market pressure, especially as room rates begin to normalize after soaring last year. According to industry insiders, promotions such as 4-night stays for the price of 3 nights are on the rise.
Mr Socker said Maybourne had invested “hundreds of millions of pounds” as part of a seven-year refurbishment of Claridge, which opened the all-suite Emory last year.
Savoy’s Arnold said the room renovations, scheduled to debut in summer 2025, will reduce the number of rooms available, which will “reduce price declines (and) optimize remaining inventory at higher rates.” He said that it helped him “become a leader.”
“There will be a bit of a downturn in the next two to three years to absorb (new supply), but gradually the situation will improve,” he added.
Other hotel groups are more confident about the short-term outlook for London’s luxury market, with US hospitality company Hilton planning to open London’s first Waldorf Astoria at Admiralty Arch in 2026.
Simon Vincent, Hilton’s president of EMEA, said people were “still in a post-COVID-19 high when it comes to travel”. London has enough unique qualities to continue to thrive as a luxury travel destination, and they are here to stay for a period of time. ”
