We may still be in debate as to whether or not the Olympics 2012 helped the property market, but there can be no such doubt in the hotel sector according to a new report from Savills.
In a new report the firm shows how the 2012 Olympic Games significantly helped boost performance in the London full-service hotel market, leading to a 90% year on year growth in gross operating profit per available room (GOPPAR) in Aug 2012. According to the research, carried out in conjunction with TRI Hospitality, Revenue per available room (RevPAR) was also up 41% for the same period.
According to the report the West End hotels and wider 5 star luxury market were the best performers with GOPPAR up an incredible 171% compared to last August, while RevPar and total revenue per available room (TRevPar) up 64% and 65% respectively. Outer London and three-star hotels achieved the lowest GOPPAR growth of all market categories although the level of growth was still impressive at 30%.
The growth is very welcome indeed for the London hotel market which has been performing relatively poorly this year.
Robert Seabrook, head of hotel transactions at Savills, comments: "The phenomenal performance in August was a timely boost for the London hotel market, which until then experienced relatively weak revenue growth and no gross operating profit growth over the seven month period to July. The market is now on track to register RevPar and GOPPAR growth for 2012."
David Bailey, director at TRI Hospitality Consulting, adds: "The hosting of such a fantastic Olympic event can only enhance London's reputation as a world class destination. However, looking to the immediate future, revenue and profit growth in the London full-service hotel market is slowing and, with the exception of the August Olympic period, is virtually flat."
The report also pointed out that investment in the sector remains resilient, although transactions are very much focussed on prime assets and foreigners are dominant in the market.
Seabrook said: "For the first time, more than half the London luxury hotel room stock is owned by foreign investors. UK owners still account for a 47% share, but investors from Asia Pacific, North America and the Middle East have capitalised on the favourable exchange rate and debt issues facing UK owners to enter the London market."