There is room for more hotel development in London, but viable projects will exist in the “spectrum between vanity and sanity,” said Graham Dodd, vice president of development, United Kingdom and Ireland at Accor.
There is space available and demand drivers for additional hotels in London, but it's crucial to get a firm grasp of owners’ aspirations and the return on investment, Dodd said on a panel at the London Hotel Summit hosted by the Atlantic Hotel Industry Conference & Exhibition.
Alexandra van Pelt, development director for Northern Europe at The Ascott Limited, said her firm is targeting seven of its brands for the United Kingdom capital, each planned for London's city center.
The Ascott Limited is a Singaporean real estate and hotel company with 14 hotel, serviced apartment and residential brands.
“We see clear structural growth in the longer-stay segment, and a lack of that product in the luxury end,” she said, adding that the Ascott brand Lyf is one flag with its sights on London.
“You can hit high [average daily rates], and there are a range of demand forces. There is resilience in that longer-stay segment,” van Pelt added.
London's luxury hotel segment is proving to be resilient, absorbing growing demand.
Marine Duchesne, vice president of development for Europe at Ennismore, said London is an obvious home for its ultra-luxury brand Faena. Ennismore partners with Accor on the Faena brand, which currently has only three hotels that are all in the Americas: Buenos Aires, Miami and New York City. She added London's Mayfair district is the likely location for a new Faena-branded hotel.
“How we would look to drive revenue is via programming,” Duchesne said.
Experience, programming and differentiation — and how they contribute to drive average daily rate and ancillary revenue — was a common refrain among the panelists.
Charlie Ingham, director and head of strategic investment at Firethorn Trust, talked about the importance of experience in the value of real estate.
“We have only one concept — hybrid — hotels that blend affordable luxury with experience,” he said.
In October, Firethorn acquired a City of London office block with plans to add a floor and convert the building into a hotel. Ingham said at the time that the project “will respond to a clear gap in the market for centrally located, affordable accommodation that doesn’t compromise on quality.”
“No compromise” is what hotel guests coming to London expect, panelists said.
That vision underlines Ennismore's debut of its luxury Delano brand in London, Duchesne said. The 67-room Delano London will be adjacent to Kensington Gardens at the far end of Hyde Park and open by the end of this year. Programming will also be a key driver of the hotel’s value, she added.
The Delano London will have three different food-and-beverage concepts, a member's club and the Rose Bar, an iconic space from Delano's original hotel in Miami Beach, Duchesne said.
“It will be beyond entry-level luxury [average daily rate], a brand that can bring in the right feeder markets. The brand has huge exposure to the U.S. and Gulf markets, and a London location has the relevant demand drivers,” she said.
Beyond the luxury segment
It is not only luxury hotels that need the correct positioning. Hotels down the pricing chain must become attractive to different types of guests with different stay patterns, Ascott's van Pelt said.
“What is needed is the ability to juggle short-term stays with higher ADR and long-term resilience,” she said.
Firethorn acquired a site in Dublin, which Ingham said had the right ingredients for long-stay and hostel products, but to find a similar space in London would likely require partner capital. He added the same is likely true for Edinburgh.
Dodd is hopeful Accor will soon bring its first Jo&Joe-branded hostel-hotel hybrid into the U.K., although it might not be the right fit for London.
“The midscale [segment] still endures. There are opportunities. It is a battle in terms of getting the right feasibility,” he said. “We are seeing a little more pressure on the economy side, for the first time ever, or at least in my career. London has never been about securing occupancy but how you manage it.”