Costs of Bedrooms in 5-star Hotels in London Falling!

Will Conference DDRs Follow?

London's luxury hotel market is facing a downturn due to asurge in new five-star hotel openings, leading to concerns about oversupply and falling room rates. It is likely this will affect conference rates, as hotels seek to fill their rooms with conference delegates. This is likely to affect some of the most expensive conference venues in London, particularly those that have been aggressively pushing up rates.

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Key points:

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• Oversupply:  A significant number of new luxury hotels are opening in London, with 757 new rooms expected in Greater London in 2025 – the largest annual increase since 2014. This 4% rise will bring the total number of luxury rooms to 19,535. Notable openings include the Chancery Rosewood, Six Senses in Bayswater, and Auberge Resorts Collection's Cambridge House. This follows openings and renovations in 2024 at establishments like the Mandarin Oriental Mayfair, Park Hyatt London River Thames, The Savoy, and the London Hilton on Park Lane.

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• Weakening Demand: While luxury hotels globally, and in London specifically, benefited from the post-pandemic travel boom, demand in London is now showing signs of weakening. This creates a "perfect storm" of increased supply and softer demand

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• Price Pressure: The increased competition and softening demand are putting pressure on room rates. The Savoy, for example, had to lower its daily rate below £1,000 in 2024 after a decline in occupancy. Industry figures suggest increased use of promotions like "four nights for the price of three".

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• Contributing Factors: Some industry figures attribute the weaker demand to factors  such as the Paris Olympics and the UK government's refusal to reinstate duty-free shopping for international visitors, which benefits rival cities like Paris and Milan.

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• Differing Perspectives: While some hoteliers express concern about oversupply and potential price wars, others remain optimistic. Some believe that focusing on higher-end suites will maintain average daily rates. Others point to London's enduring appeal as a luxury destination and the increasing number of high-net-worth individuals globally as reasons for continued confidence.

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• Strategies for Success: Hotels are adopting different strategies to navigate the changing market. Some are focusing on renovations and enhanced guest experiences, like Brown's Hotel, while others are managing inventory and optimizing rates.

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• Weakening Pound: Over the last month (10^th Dec – 10^th Jan) the pound has weakened by 3.39% against the dollar. See our blog post here. London conference venues are now 3.39% cheaper for most international buyers than they were a month ago.

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• Long-Term Outlook: While a short-term slump is anticipated to absorb the new supply, many believe the long-term outlook for London's luxury hotel market remains positive.

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In essence, London's luxury hotel sector is at a crossroads. While the city remains a top destination, the influx of new hotels is creatinga challenging environment that will likely impact room rates and require strategic adjustments from hoteliers. If you are looking for award-winning meeting and conference space in Central London get in touch today: 0207 706 7700 or enquiries@cavendishvenues.com.