The latest PricewaterhouseCoopers (PwC) Hotel Forecast has predicted that London's soaring recovery is set to continue during the next year.
However, a surge of new room supply ahead of the Olympics could depress revPAR growth in 2011, especially in London.
Liz Hall, head of Hotels Research at PwC, said: “Although the race is on to build rooms ahead of the Olympics, and the increase in demand stimulates the development of new hotels, the handover of supply to demand is not necessarily immediate or smooth, and can create shortages, high occupancy and raised rates – as well as the reverse.”
“Hotels that are expanding to capture Olympic trade alone are rather missing the point. The impact of the Games should be positive but could be short lived and will depend on location. On the flip side some leisure visitors may well shun London at all costs to avoid congestion or security fears."
Record room rates
At present PwC predicts London hotels will achieve record room rates of £130 in 2011, with improving economic conditions, the return of the business traveller and international demand all set to keep the capital's hotels motoring.
London revpar growth should finish 2010 up 8.9 per cent at £101.28, and with strong rate and occupancy growth forecast for 2011, PwC predicts revpar growth of 9.3 per cent next year to £110.65.
PwC predicts that if the maximum new rooms currently planned are put in place ahead of the London Olympics - some 4,305 - next year's revpar growth in the capital will be pegged back from 9.3 per cent to 5.7 per cent.
Martyn Leek is news editor of BigHospitality's sister publication, M&C Report.