London has retained its crown as the most sought-after location for hotel operators eyeing new openings in the UK and Ireland, but high build costs and interest rates could delay future developments according to new survey results.
Senior executives at hotel operators were asked to rank their appetite for space in 20 key markets and 88% said they had “very high” interest in opening a site in the capital. Edinburgh and Dublin were the second and third top choices.
Real estate consultancy Cushman & Wakefield spoke to 33 respondents at firms collectively responsible for 1500 hotels operating in Europe, and that have an additional 363 proposed accommodation sites in the pipeline.
Richard Candey, head of investor and developer services in the EMEA hospitality team at Cushman & Wakefield pointed to a “fast rate of performance recovery” post-pandemic in the sector.
There are string of new luxury sites preparing to welcome guests in 2023, including the Peninsula London overlooking Hyde Park Corner, and 1 Hotel Mayfair on Berkeley Street which opens this month.
Candey said: “London undeniably retains its international appeal as a leading historical, cultural and financial capital of the world. Its attraction is obvious and international visitors are returning, despite concerns about the negative impact of the loss of tax-free shopping. Any changes to VAT would however be welcomed by operators and a catalyst for continued growth in demand.”
Looking ahead the survey, undertaken in the first half, found there are challenges for fresh schemes and respondents have reported that over a quarter of pipeline projects are either currently delayed or on hold (26%).
Amid uncertainty in the debt markets, cost of debt and rising cost of construction, it is highly likely that percentage could rise to be “significantly higher”, the report said.
