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Upcoming London Hotel Paints Picture of UK Hospitality Future

July 20, 2009 By: Jena Tesse Fox


The Guardian says that the $578.5-million Park Plaza Westminster Bridge is still scheduled to open despite the drop in UK tourism and difficulties for hotel companies. It will be London's biggest hotel in a generation, boasting 1,021 guest rooms spread over 19 floors. The basement holds a 12,916-square-foot pillar-free ballroom (the biggest in London), which can accommodate up to 1,400 diners. Room prices are expected to start from $231 per night.

There will be inevitable questions about the wisdom of a bold venture in the depth of the recession. The number of people visiting Britain has fallen for the first time in seven years, with a sharp drop in the number of Americans—traditionally the big spenders. Overseas visitors have been cutting back on expenses-funded business trips—usually lucrative business for hotels—as well as holidays, leaving a glut of empty rooms.

The British Hospitality Association insists that current occupancy rates do not look too grim—70 percent for the provinces and 81.5 percent for London, according to the latest figures covering May. London has remained the top destination for overseas visitors, with 14.8 million trips last year.

But the reality is that few are able to charge the full room rate, so it is no secret that heavy discounting is taking place to fill the empty rooms. While the large hotel chains can take that kind of hit, things are more difficult for smaller hotel chains and independent operators.

Surprisingly, perhaps, there have been relatively few high-profile casualties of the recession. In January the Real Hotel Company, which operated dozens of hotels in Britain and Europe, appointed administrators after running into financial difficulties.

The company ran hotels under its own brands, Purple Hotels and Stop Inns, and under brands licensed from Choice Hotels International. It also ran the New Connaught Rooms conference venue in London. But it was forced into administration after its usually lucrative function business took a hit as corporate events and Christmas parties were canceled due to the economic slowdown. Significantly, all of its hotels were bought by other groups.

Miles Quest, spokesman for the British Hospitality Association, claims that over $41 billion has been spent on new hotels and renovations over the last five years, especially for the budget chains.

And to underline the point, last week the budget chain Travelodge, announced the exchange of 12 new properties through an additional $115-million, 1,118 room-expansion.

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