London hotels record a 2% rise in profitability

London hotels recorded a 2% year-on-year increase in profitability during 2015, largely due to the Rugby World Cup.

Averages room rates during October, at the height of the Rugby World Cup, grew by 7.3%, compared with the same month in 2014.

Joe Stather, intelligence manager, EMEA, for CBRE Hotels, said that during the third quarter of 2015, the London hotel market was facing negative growth by the end of the year, largely due to economic uncertainty in China and Russia and a 4% increase in new hotel stock.

"In Q4 however, with over 2.5 million visitors coming to the UK to watch the Rugby World Cup, and three out of the 13 rugby stadia being in the capital, there was an explosion in demand for London's hotels, returning the sector to profitability by year end," he explained.

Hotel transactions throughout the year were also strong. Notable deals brokered by CBRE Hotels included the sale of the 203-bedroom Regency hotel in Kensington, for more than £100m. The fourth quarter also saw the launch of 12 new hotels assets, including the 292-bedroom London Hilton Bankside.

Stather added: ""London is one of the few UK markets, owing to high actual trading performance, that can support new hotel development, despite rising construction costs."

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