LONDON HOTEL prices continued to rise in August a new report reveals.

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The monthly study by PKF Hotel Consultancy Services uses data from a range of three, four and five star hotels in the capital and across the UK. The August figures show a big hike in the ‘average daily room rate per occupied room’ in London jumping from £114.78 to £125.65 – an increase of 9.5% for the same month year on year. This compared to a nationwide increase of 4.9%.

In July the ‘average daily room rate per occupied room’ in London grew at 6.5%, while the rest of the UK saw prices drop by 0.9%.

Occupancy Dip

The rise in room rates came despite a dip in occupancy levels which were 3.2% lower in August 2011 than the same month last year, dropping from 83.6% to 80.9% across the capital’s 19,250 available hotel rooms. In comparison, occupancy rates across the UK as a whole increased by 2.4% over the period.

The average daily rooms yield per available room – i.e. taking into account the increase in unoccupied rooms – rose by a more modest 5.95% in London.

The leap in the capital’s room rates adds weight to the growing industry view that high London rates could be counter-productive in the long run. As we reported recently “London is in danger of pricing itself out of the market” if it continues to witness endless rate increases.


Adding to the pressure on London hotel prices is the view that the drop in occupancy levels in August was a one-off temporary fall in demand during and immediately following the riots. Last week Travelodge said that the riots cost it £1 million nationwide.

“The riots appear to have had a negative impact on London hotels as visitors decided to stay away or shorten their breaks in the capital” said PKF’s Robert Barnard.

“Although occupancy remained above the important 80% benchmark, the decline in guest numbers bucks the trend seen earlier in the year and only skilful revenue management enabled hoteliers to avoid a drop in yields during their peak season.”

“The popularity of the ‘staycation’ has endured for another year and, given the lack of any meaningful economic recovery, it is hard to see anything but a continuation of this trend in summer 2012.”

2012 Olympics

With the capital playing host to the London 2012 Olympic Games next year opinion is split whether this will have a positive or negative impact on hotel prices.

Over the period of the Games, rates currently offered are up to ten times higher than for similar dates this year, with one Bethnal Green hotel offering a suite for £18,000 a night for the opening weekend. However it is thought that many potential visitors will be put off from visiting London during the whole summer thanks to the perception of price gouging by previous host cities.

London hotel performance dented by August riots but rest of the country powers ahead (PKF)
London hotels warned capital ‘is in danger of pricing itself out of the market’ (LondonNet)
Riots cost Travelodge £1 million (PA)
London Hotels Accused of Price Gouging for 2012 Olympics (LondonNet)

Six Tips to Bag the Best London Hotel Prices and London Hotel Special Offers (LondonNet)
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Photo ‘Hotel’ by aubergene used under Creative Commons License