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Hotels shape up for London 2012.

by Andrea on January 3, 2011

The London Olympics in 2012 has triggered a breakneck pace of investment in new hotel openings...but will it all end in tears?

The London Olympics will certainly boost revenues for the capital’s hotels in 2012.  But while the majority of hotels are in the West End, most of the Olympics events will be in the East End – and it’s not an easy commute.

East London isn’t traditionally the most attractive area for top-class hotels.  But both the recently-opened Town Hall Hotel in Bethnal Green and the Andaz Hotel in Liverpool Street are changing this stereotype and particularly good London hotels for foodies.

However, Docklands – with its focus on the financial services sector at Canary Wharf – does have some good modern hotels, such as the Hilton Canary Wharf (one of the best London Hiltons), the Marriott West India Quay and the Radisson Blu Edwardian New Providence Wharf.   Shoreditch and Hoxton – close to the eastbound tube lines – are also likely to benefit.

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The Hilton Canary Wharf is one of the best East London hotels within a short commute of the Olympic site

Most of the hotels around Stratford and the Lower Lea Valley are two or three star establishments and they’re generally pretty small.

There’s the Holiday Inn Express Stratford with 114 rooms, and the Ibis Stratford with 108.  Premier Inn will be opening in Stratford in 2012 and will be far bigger than its local rivals, with 267 rooms – but that’s still very few in relation to the expected demand.  It looks as if visitors will just have to stay somewhere else and commute to the Olympics site.

If they do, they’ll certainly have enough London hotels to choose from, because new hotel capacity is currently being added at high speed throughout London.  There’s particularly strong expansion in new London hotel openings within the buoyant luxury sector.

Figures from hotel industry analysis firm STR Global show London has more hotel rooms under development than any other city; there are 8,394 rooms in the active pipeline with 3,682 actually under construction.  The trend is so fast that this data may be out of date by the time you read it.

It is a huge investment – so much so that accountants PWC warn that over-investment could damage profitability if a glut of rooms leads to lower prices.  After all, the Olympics only lasts a few weeks and it’s important to be able to fill the hotels afterwards: a point intelligently made by the CEO of Tune Hotels when he spoke recently to London Hotels Insight and revealed his company’s more measured expansion plan.

The heat is really on in the cheap and mid-range market.  Premier Inn is looking to expand and involved in an increasingly acrimonious battle with rival Travelodge to become the biggest operator in the London market.

Check the best rate for Travelodge in London from 30+ hotel booking sites

The recently-opened Travelodge Waterloo was the company's 400th hotel - and the company has no intention of slowing down

Since both Travelodge and Premier Inn are planning thousands of new rooms over the next few years, the competition between them is likely to continue to be as fierce as ever.  We only hope one of them finally sees the light in being the first budget hotel brand to provide free WiFi.

It will be interesting to see what happens.  The middle of an economic slowdown doesn’t seem ideal timing for planning new hotels and I wonder whether the Olympics has forced hotel companies to bring forward investments they had originally earmarked for the longer term.

Still, on a personal level I’m looking forward to seeing some new hotel openings – it will give me more to write about!

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Photo credits: Travelodge, Hilton Canary Wharf, London 2012.

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