By David Stewart White
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Last November, business analysts at PricewaterhouseCoopers (PwC) released their 2013 forecast for hotels in London and the United Kingdom. PwC predicted an “Olympic hangover” for London hotels in 2013. As the spring and summer tourism season gets underway, visitors are about to see what impact the Olympic hangover actually has on London lodgings.
Thousands of hotel rooms were added for the 2012 Summer Games, and this may temporarily bring down occupancy and hotel rates in the British capital. PricewaterhouseCoopers noted a two-speed economy in the United Kingdom hotel market: London remains healthy, but other regions in the country experience much lower demand for hotel rooms.
According to PwC, London hotels had outstanding occupancy rates in 2012, with more than 80 percent of available rooms filled and an average daily room rate over £142 ($214). This was spurred by a series of high-profile special events in the city starting with the Queen's Diamond Jubilee and culminating with the Summer Olympic Games and the Paralympics. Even in non-Olympic years, London’s ongoing events, such as the Wimbledon Championships, and its status as a world business center, mean hotels are often full. And as any London visitor can attest, hotel rates in the city are often sky-high.
The PwC study showed a marked contrast in areas outside of London. The UK “provinces” experienced hotel occupancy rates under 69 percent in 2012 and average rates barely topped £58 ($88).
The economics lesson for visitors to London and the UK? In the capital, hotel rates may decline a bit over their Olympic-fueled 2012 levels. PwC predicts average rates of just under £138 ($208) in London during 2013. PwC noted that weekends were reported “softer.”
This confirms past experience where travelers to London often nabbed lower weekend rates at business-oriented hotels in the city.
PwC also noted that the flurry of 2012 openings of new, high-end, boutiques, and big-name budget hotels caused a “squeeze in the middle” of the London hotel market. New hotels reduced rates to attract guests who experienced stays in brand-new facilities. This made life difficult for some of London’s established and mid-range hotels, according to PwC.
The squeeze on older mid-range hotels could present some opportunities for London visitors if the older properties offer discounts to remain competitive. Whether this actually happens is pure speculation, but it pays to shop around when booking a hotel London hotel room in 2013.
The PwC consultants see little change in the already “bargain” hotel rates in the rest of Britain. Non-London hotels got little boost from 2012 special events, but their post-Olympic landing depends more upon the general economy, according to PwC. For visitors the economics are simple: lower hotel room rates continue to be the norm in the UK's rural areas and smaller cities.
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