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Hotel rates could soon 'plateau' in London

Hotel Bulletin warns that 7,000 room openings slated for 2016 will create oversupply and soften rates

Pictured: London hotel rates have been forecast to plateau this year

London hotel rates have been forecast to plateau as growth outpaces demand. 

With 7,000 new rooms scheduled to open in the capital this year, hospitality consultancy HVS's Hotel Bulletin points out that as occupancy declined for four consecutive quarters last year, London hoteliers would reflect that shift with price.

"The huge amount of openings planned for 2016 in London will be of concern to the city's hoteliers who, while historically are used to robust performance, are currently experiencing limited demand growth," HVS chairman Russell Kett said.

"Flat or declining occupancy is historically followed by plateauing rates indicating that a peak in hotel market trading may nearly have been reached."

The predictions fly in the face of commentary that London is currently operating as a supplier's market, with demand outpacing supply. London was also recently named the third most expensive city in the world after New York and Washington DC, with average room rates at £141.

The Hotel Bulletin says the number of openings in the capital this year will double that of last year's openings. Notable arrivals in late 2015 included four new hotels under Hilton brands, totalling 654 bedrooms, along with the 453-bedroom InterContinental London - the O2.

Across the UK, 16,000 rooms are expected to open this year compared to 10,000 last year. More than half of the UK's development pipeline opening within the next three years will be in the budget sector (51 per cent) followed by four-star properties (28 per cent). About 9 per cent will be five-star hotels.

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