Mini-American Invasion of British Hotel Sector Is Coming This Summer

“Luxury travel will always gravitate towards London,” said Chadi Farhat, chief operating officer of the Los Angeles-headquartered SBE Entertainment Group. “London remains buoyant and a global capital of art, culture, architecture, food and drink, and commerce.”

His group is poised to open the 120-room Mondrian Hotel in the east London neighborhood of Shoreditch this summer, with suites costing as much as £1,099 a night, equivalent to $1,500.

Graduate Hotels, the Chicago-based operator of 30 lodging properties in U.S. college towns, said it would soon open its first European outposts in the England university cities of Oxford and Cambridge. Chief Executive Ben Weprin believes that Britons prevented from traveling overseas this summer will opt to staycation instead.

U.K. hotels faced a tougher 2020 than those in the U.S. Hoteliers in Britain endured months of government-mandated full or partial closures.

Lodging data company STR said that British occupancy levels last year ran at 40.4%. That was slightly worse than the 44.1% in the U.S., though a bit better than in Germany, where occupancy fell to just 31.9%. British hotel revenue per available room last year fell harder, too, down about 60% compared with 2019. U.S. hotel revenue fell 47% over that period.

London’s more moderately priced hotels ran small losses in 2020. Many remained in limited use by health and other essential workers, or were pressed into service as quarantine hotels. But the pandemic caused most business travel to dry up and pounded the high-end properties. London’s luxury hotels suffered losses of £35 a room on average per night, according to real-estate agent Knight Frank.

Will Duffey, head of Europe, the Middle East, and Africa hotels and hospitality at JLL, said regional hotels catering to domestic tourists will be the quickest to return to profit. Business hotels and London’s luxury sector, dependent on North American and Middle Eastern travel, will take longer, he added.

But Julian Kemp, a senior director of CBRE, is hopeful the U.K.’s rapid vaccination program could help its tourist trade bounce back before other nations. “The question is, will some of our air corridors open in advance of some European ones,” he said.

He doesn’t believe, however, that international travel will return to a semblance of normality until 2022. When it does, he thinks business travelers are the ones to watch.

Mr. Kemp also has faith in luxury. “All the statistics out there…[show] how much people have saved over the last 12 months,” he said. “They will want to go and have that experience.”

One beneficiary of that trend could be the Sydell Group LLC. The New York-based hotel operator plans to open the 91-bedroom NoMad Hotel in Covent Garden, with room prices ranging from £455 to £2,495.