London has been branded the world’s most expensive city for five star hotel suites and luxury serviced apartments, according a new accommodation survey.
An under supply of top end hotels in the capital, due to land prices, and the strength of the pound have pushed prices up to new heights – with the most lavish rooms in Mayfair costing £11,700 a night.
At £2,050 per night, the cost of renting a five star London hotel suite is now eight times more expensive than renting a furnished apartment (£248 per night), a new study from the property agents, Wetherell, has revealed.
At £746,044 – the cost of renting a hotel suite for a year in London is the price equivalent of buying a flat in London or a country house in the home counties.
Budget hoteliers cannot cover their costs and are being forced out of the West End market due to rising property values in prime central London – up 77.9pc since 2009.
“The report shows the astonishing strength of the recovery in values in the luxury hotel, serviced apartment and private rented markets in prime central London since the global recession of 2007 to 2009,” said Peter Wetherell, chief executive of Wetherell.
“Since 2009 hotel and rented apartment rates have risen by over 25pc and the cost of renting a room and sleeping in London is now at a record high. In the hospitality sector, Mayfair takes the crown as the most expensive place to sleep in London, and one of the most expensive in the world alongside New York and Monaco.”
The detaiiled report which analyses cost per square foot, carried out by research house, Dataloft, suggests the city is on the cusp of a surge of investment into the London hospitality market.
Mayfair – the most costly destination
Mayfair has the most expensive hotel suite in the capital – over £11,700 per night for a stay in the opulent Royal Suite in Park Lane’s Intercontinental Hotel. The area also contains the largest number of the top 10 most expensive hotel suites across the capital and commands a 4pc price premium over equivalent values in Knightsbridge and a 60pc price premium over St James’s, Whitehall and The Strand.
The report found that there are 129,000 hotel rooms in central London but just 12pc (14,900 rooms) provide five star accommodation.
Average occupancy rates in this luxury sector are at 78pc to 80pc, indicating a demand across the market. In addition, on an international comparison, London’s five star hotel occupancy rates are now amongst the highest in the world, outstripping Dubai (79pc), Paris (78pc), Munich (77pc), Moscow (70pc), Barcelona (69pc) and Rome (69pc).
Narrowing viability, the significant undersupply and a constant stream of international visitors has driven a string of luxury hotel openings in London – the 175-bed Edition by Marriott; 90-bed Ham Yard and the 26-bed Chiltern Firehouse Hotel by Andre Balasz on Chiltern Street.
Others in the pipeline include the 75-bed Beaumont Hotel in Mayfair (opening Autumn 2014), the refurbished Lanesborough (scheduled to re-open end 2014), Galliard Group’s 235-bed hotel conversion of the former Scotland Yard headquarters scheduled to open in 2016 and Admiralty Arch – which is planned to become the 100-bed Armani London Hotel, opening in 2016.
Branded residences that provide hotel suites, serviced apartments and private sale flats are set to grow and become a major niche sector of the London hospitality market as such property has become unaffordable for many as either a home or a standard buy-to-let business, the report found.