Wednesday 15 April 2020 11:58 am

London hotel market 'set for strong post-coronavirus recovery'

London’s hotel market could make a complete recovery by the end of next year if coronavirus restrictions are lifted by the end of June, according to the latest research.

Knight Frank research found that there could be a surge in UK investment volumes in the final months of 2020, and showed that the hotel market in the capital could make a full recovery by the end of the fourth quarter in 2021.

Read more: London luxury hotel market booms as weak sterling attracts tourists

The research showed that occupancy growth would be stronger in the initial recovery phase, leading to a rebound in revenue per available room, which will then drive average daily rate growth. 

However the modelling, which is based on travel restrictions being lifted by the end of June, showed that while popular destinations such as London and Edinburgh would make a rapid recovery, other regions would lag behind. 

Knight Frank analysed how the market had rebounded after previous major events including Sars, London terror attacks, and the 2016 Brexit vote to assess the potential impact of Covid-19. 

Shaun Roy, head of hotels and specialist property investment at Knight Frank, said: “We are currently in an enforced lock down, where the focus for the hotel market remains one of survival, with cash conservation and liquidity of immediate concern. 

“Yet as we look beyond this, and at how the UK hotel market has fared following other significant global events, we believe that the UK hotel market will recover and rebound strongly.

“We predict that the market will bounce back following the relaxing of travel restrictions and the containment of the virus, leading to a potential full recovery in London and a gradual recovery in the regions as well as an uplift in investment volumes nationally.”

Read more: Travelodge to open 20 new London hotels

Meanwhile, the latest data from estate agent Savills showed that transaction volumes in London’s hotel market totalled £1.15bn in the first quarter of the year – a year on year decline of 8.8 per cent – which included the sale of The Ritz. 

Investment volumes in London hotels were set to hit record levels during the quarter, however the UK coronavirus lockdown saw transactions falter.