London boutique hotel market set to expand

09 August 2010 by
London boutique hotel market set to expand

Strong occupancy and room rates in the capital's boutique hotel market during the recession will enable the sector to expand over the next five years, according to a report from HVA London.

Lara Sarheim, the report's author, said that the aspirational qualities of boutique hotels tend to achieve a high degree of guest loyalty, which has proven critical to the success of these hotels in a turbulent trading environment.

"They are popular with operators as they are less reliant on the corporate market, depending more on leisure stays," she said. "Operators are able to charge almost luxury prices, but are not obliged to offer the full luxury service, therefore labour costs are lower."

Occupancy of London's boutique hotels, which include the likes of The Halkin, One Aldwych, and The Soho Hotel - has risen this year to around 77%, at least 2% above 2009 levels. Average room rates are expected to exceed £188 this year. Revenue per available room (revpar) for central London's boutique hotels in 2009 was £135, compared with a revpar of £105 for the city's hotels overall.

Boutique hotels often use building and warehouse space that mainstream hotel operators are not able to consider, resulting in desirable properties opening beyond the West End.

"Boutique hotels in areas such as Shoreditch and Bethnal Green will become destination-led, drawing consumers to new areas and creating new markets," said Sarheim.

"The launch of boutique brands by large hotel operators, such as Edition by Marriott and W from Starwood, emphasises the importance of the sector.

"Boutique hotels have restored the hotel sector to its glorious past, when hotels were not simply commodities with heads in beds, but experiences that left lasting memories."

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By Janet Harmer

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