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Boutique and luxury hotels are on the rise with 210 new hotels currently in the development pipeline in London, according to a study by Boodle Hatfield

Most of the hotels across the capital that have planning permission, or are already under construction are based in Westminster (48), adding over 6,800 new guest rooms. A further 12 are in the Heathrow area.

Boodle Hatfield says that the number of new hotels being planned shows investors remain optimistic about the London market’s potential for growth post-Brexit.

The UK’s hotel market is one of the few sectors of the UK economy to have benefited from the slump in Sterling related to Brexit. The decrease in value of the pound has made it cheaper for international tourists to visit the UK and has also encouraged more “staycations”.

The luxury (four and five stars) hotel segment, often focused in Westminster, has attracted visitors from the US and the Gulf, who are among the highest spending tourists.

Tourism from the Gulf and US

Tourism from the Gulf to the UK rose in 2018, with 675,000 visits to the UK from Kuwait, Qatar, Saudi Arabia and the UAE collectively, up 20% from 2014 to 2018. Visits from the US to the UK grew 30% over the same period to 3.88m.

Attracting US visitors to the capital has been important to the luxury hotels industry. Americans often spend more money per person in the UK than any other nation (average £860 per person per trip), over twice the amount of the next highest country, France in 2018.

Boutique and luxury hotels account for 74% of the planned new hotels in Westminster.

The development of luxury hotels in London is also partly driven by flows of foreign capital into the sector. Hotels remain a trophy investment for overseas UHNW individuals and family offices.

As well as attracting tourists, the devaluation of Sterling has made investing in the capital’s hotel market cheaper for overseas investors.

Rajeev Joshi, partner at Boodle Hatfield, said: “Investor appetite in the London hotel market is holding up. But investors will want to know that this new supply of hotels can be soaked up by increasing demand.

“For tourism to continue to grow, the UK needs to ensure that post-Brexit, we do not start to be seen as a less convenient destination for tourists from the EU or from further afield. Greater investment in infrastructure will be a key part of this. Accelerating the delivery of projects such as the third runway at Heathrow and the Crossrail would help.”

luxury hotels, Boodle Hatfield
Top 10 areas for hotels currently in development across London

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