Some of the findings of the new ‘Sleeping in London’ report on the hotel, serviced apartment and private flat-rental markets undertaken by leading West End and Mayfair estate agent Wetherell include:
- London is now the world’s most expensive city to rent a 5-star hotel room, luxury serviced flat or rental apartment according to the findings of a new accommodation survey
- Cost of renting a 5-star hotel room in London now averages £497 per night, compared to £361 in Geneva, £283 in LA, £259 in Tokyo and £131 in New York
- The cost of renting a room and sleeping overnight or longer in Prime Central London (PLC) has hit new record highs across the hotel, serviced apartment and flat-rental markets
- At £2,050 per night, the cost of renting a 5 star London hotel suite is now eight times more expensive than renting a furnished apartment (£248 per night)
- At £746,044 – the cost of renting a hotel suite for a year in London is the price equivalent of buying a flat in London or a country house in the home counties
- At £11,700 per night for its top suite – Mayfair is London’s most expensive hotel destination
- The hotel suite and rented apartment markets are becoming increasingly similar
- Rising property values in PCL (up 77.9% since 2009) are making budget hotels unviable making more 5 star hotels the only viable pipeline option
- Branded residences that provide hotel suites, serviced apartments and private sale flats are set to grow and become a major niche sector of the London property/hospitality market
- Rented apartment rates have risen by over 25% since 2009 creating the opportunity for investors to acquire a London apartment in need of refurbishment, create an ‘Armani style’ residence, rent out and effectively “enter the luxury hotel business”.
Strength of recovery in values
Peter Wetherell, Chief Executive of Wetherell said: “Our new Wetherell Sleeping in London Report shows the astonishing strength of the recovery in values in the luxury hotel, serviced apartment and private rented markets in PCL since the global recession of 2007 to 2009. Since 2009 hotel and rented apartment rates have risen by over 25% and the cost of renting a room and sleeping in London is now at a record high. In the hospitality sector, Mayfair takes the crown as the most expensive place to sleep in London, and one of the most expensive in the world alongside New York and Monaco.
Ongoing undersupply of luxury accommodation
“Despite the high values being achieved in the 5 star hotel and luxury rental markets the sector continues to grow and flourish due to the ongoing undersupply of luxury accommodation in PCL in relation to global demand. At 78%-80% occupancy rates in Mayfair and the wider West End are amongst the highest on the globe, beating the best locations in cities across Europe and the wider world. This is helping to drive new development and encouraging significant inward global investment into the hotel and luxury rented sectors in Mayfair, Knightsbridge, Whitehall and Kensington.
Hotel costs outstrip letting and serviced accommodation
The report finds that the average cost of renting a 1,038 sq ft 1 bedroom 5 star hotel suite in Mayfair is £2,050 per night, which is eight times more expensive than the equivalent cost (£248 per night) of staying in similar sized private rented furnished apartment. The cost of a 5 star Mayfair hotel superior room at £497 per night is double the cost of private rented accommodation whilst a serviced Mayfair apartment averages £325 per night.
Average weekly rates in Mayfair work out at £14,347 for a 5 star hotel suite; £3,477 for a 5 star superior room; £2,277 for a serviced apartment and £1,738 for a private rented furnished apartment: making an average weekly rental 700% more expensive for a hotel suite compared to a rented apartment. The cost of renting these units for a year works out at £746,044 for a 5 star hotel suite; £180,804 for a 5 star hotel superior room; £118,404 for a serviced apartment and £90,376 for a private rented furnished apartment.
In order to analyse the costs of the various accommodation types on an exact like- for-like comparison, the report also analysed average room/unit costs by £ per sq ft. The findings were the same: 5 star hotel suites are the most costly at £13.83 per sq ft; 5 star hotel superior rooms cost £10.42 per sqft; serviced apartments cost just £3.49 per sq ft whilst private rented accommodation provides the most value at £1.90 per sq ft.
Whilst private rented accommodation in central London tends to make 100% of its revenue from rental income, in the hotel sector 72.9% of revenue is from room rental, with 12.8% from food, 5.7% from beverage and the balance derived from lifestyle facilities such as health spa and beauty treatments (HotStats).
The One Hyde Park effect: Branded Residences
Arguably the most “game changing” recent development in the London luxury property and hospitality market is the emergence of branded residences, which the ‘Sleeping in London’ report forecasts is set to grow and become a major niche sector of the London property/hospitality market.
Branded residences are the ultimate synergy vehicle, an ultra-luxury hotel with rooms and suites, complete with an additional wing/section of the building for private sale or serviced apartments. Branded residences are a highly lucrative revenue stream product, enabling income generation from apartment sales; hotel licensing, hotel room rates, hotel food, beverage and leisure facilities and serviced apartment services, at the same time benefitting from cross-selling opportunities across all sectors.
This market is massively undersupplied at present and there are currently less than a dozen branded residences across inner London.
The most high profile are One Hyde Park in Knightsbridge (Mandarin Oriental), Bulgari Residences & Hotel in Knightsbridge, The Shard (Shangri-La) at London Bridge, Marconi House (ME Hotels) on The Strand and The Residences at W Hotel (Starwood Hotels) on Leicester Square. Currently branded residences are limited to 5 star hotel formats, but the success of the existing projects clearly indicates that the format could also be strategically expanded into the 3 and 4 star hotel sectors, linked to lower priced serviced or private sale residences.
About ‘Sleeping in London’
To deliver ‘Sleeping in London’, Wetherell commissioned Dataloft, in association with Lonres, to undertake a detailed analysis of 5 star hotel room/suite; serviced apartment and rented flat rates across Mayfair. Comparisons were then drawn between the Mayfair market and other districts such as Knightsbridge, St James’s and Whitehall/Strand using findings from other research material. The report has also made observations about hotel and branded residences development across PCL. The report has drawn on data from Lonres, HVS, Statista and other hospitality/property industry information.
For the full results of the Wetherell ‘Sleeping in London’ Report telephone 020 7529 5566 or visit: www.wetherell.co.uk