Cost of living crisis, what cost of living crisis? A new breed of uber-luxury hotels in London is breaking records with rooms costing more than £1,000 a night as wealthy visitors flock to the capital for “experiences” only (a lot of) money can buy.
In the Peninsula on Hyde Park Corner, a short walk from Buckingham Palace, rooms start at a kingly £1,300. Despite the startling price tag, the hotel is said to be running at full capacity, with the manager, Joseph Lee, reporting it has been “very busy” since last month’s opening. “It’s been very successful,” he says, with the hotel anticipating a strong Christmas. “We’ve been very happy with the level of bookings so far.”
In the hotel’s grand lobby its signature “pages”, dressed in white uniforms and chin-strapped pillbox caps like Twenties telegram boys, are a blur of perpetual motion. Guests linger over snacks and £110 high teas at tables that look out at the chaos of traffic navigating Wellington Arch.
The lift to its motor and aviation-themed Brooklands rooftop restaurant is styled like the basket of a hot air balloon – and guests’ feet never really touch the ground. In the bar, pulling on a lever in the armrest of the plush banquettes, summons another drink. In the restaurant, under a Concorde-inspired sculpture, they are serving a £195-a-head tasting menu. Outside in the courtyard a fleet of luxury cars, that includes two Rolls-Royce Phantoms, waits to whisk guests around the sights.
With many Britons struggling with rising living costs it could be another planet. However Fflur Roberts, head of luxury goods at the market researcher Euromonitor, says super-luxe hotels are popping in the world’s big tourist destinations as the 1% increasingly spend on “experiences”. Its figures estimate the global luxury hotel market is now worth £55bn but is headed nearer £80bn within four years.
“Although most of us are struggling to pay our rent and mortgages, there is a huge amount of wealth out there,” Roberts says. “A few years ago you could easily find rooms for £500 or £600 whereas now it’s kind of normal to be £1,000 plus.” The hotels “aren’t just places to stay”, adds Roberts. They are resorts under one roof with multiple restaurants, state-of-the-art gyms and wellness spaces. “The needle keeps getting moved.”
The Peninsula is far from an outlier. This year will herald the arrival of more than 1,000 new or refurbished luxury hotel rooms in London – the biggest surge since the 2012 Olympics, according to the property information company CoStar.
As well as the Peninsula, in nearby Whitehall the historic Grade II-listed Old War Office building has, after a painstaking £1.4bn refurbishment, been reborn as Raffles London at the OWO. Next year, a new Mandarin Oriental, the capital’s second, will open in Mayfair, as will the Emory, a new sister hotel to Claridge’s. The list goes on and in a business fuelled by breathtaking one-upmanship Claridge’s freshly remodelled £60,000-a-night penthouse is hung with 75 works by Damien Hirst.
After the hiatus caused by Covid, international tourism has roared back and there seems to be no shortage of high rollers. Almost 16 million visitors are expected in London this year – 2.5 million or 18% more than last year. They will collectively spend about £13.4bn, which is about 25% more than last year, according to London & Partners, the mayor of London’s tourism and growth agency.
Since 2019 luxury hoteliers have defied gravity with “unprecedented” room rate increases, to achieve some of the highest prices on record, says Cristina Balekjian, CoStar’s director of UK hospitality analytics, adding that rising demand means 2023 is “looking to be another record year for hotels in this sector”.
Although not traditionally the liveliest part of town, Raffles London’s location is a tourist fever dream. From the front steps look right and you can see Nelson’s Column, look left and there is the Palace of Westminster. Opposite is Horse Guards Parade and mounted soldiers in gleaming metal helmets.
Claiming “one of the most powerful addresses in London” prices for the smallest rooms are punchy too, officially starting at £1,100. For its most storied rooms – such as the Haldane suite that was once Winston Churchill’s former office, you can add another zero and then some. If you are wondering what kind of toiletries you get for this kind of money it is a posh own brand called 1906 (from when the OWO was built) with a bespoke scent created by the perfume designer Azzi Glasser.
With its links to important political figures in the nation’s history and daring wartime espionage, Raffles London has history in spades. In the Guards Bar you can sip on a £24 London Sling, a local take on the famous Raffles Singapore sling.
The room rates may be unprecedented but, weirdly, stratospheric prices heighten the allure of these luxe hotels, says Andrew Sangster from the industry news service Hotel Analyst.
“The ultra-rich are price insensitive,” he says. “What matters most to them is not the price but the exclusivity; your Hermès scarf doesn’t keep you any warmer but you feel whiz bang when you wear it. You set your prices super high because that makes the statement. It’s not about competing down to the last penny and making sure you’re always full.”
There are enough people around with deep pockets and willing to “spend £1,000 a night or even £10,000 or £20,000”, Sangster adds. “We’ve got some suites in London going for £100,000.” At that end there are very high net worth individuals, he says, but at about £1,000 it is the moderately wealthy, entrepreneurs and senior executives checking in.
“It might be that a suite is only sold every other day but if it makes three or four times as much money as a regular room, it doesn’t really matter,” he says. “Although right now, most of these rooms and suites are fully booked.”
