Political, Economic Uncertainty Hurting London's Luxury Hotels
PHOTO: London, England (photo courtesy of Thinkstock).
London's luxury hotels are struggling through the early stages of 2016.
According to data from STR, the city's high-end accommodations reported a meager 65 percent occupancy over the course of the first three months of the year.
That figure is down five percent from the same period in 2015 and represents the city's lowest since the global recession in 2009.
While recent terrorist attacks in Europe haven't helped draw tourists to London, there are a variety of factors that are contributing to the city's declining occupancy numbers. Frustratingly, though, many of the factors are out of local hoteliers' control, Christie & Co. hotel consultant Andreas Scriven told Bloomberg.
In wake of recent attacks in Brussels and Paris, security concerns have emerged as a major factor impacting interest in the city's hotels.
However, political uncertainty is also contributing significantly to London's luxury hotels' poor occupancy figures through the first quarter of 2016. With the U.K.'s potential departure from the European Union this summer looming, wealthier travelers are watching with anticipation from a distance.
The U.K. referendum is scheduled for June 23, so problems are likely to persist through the second quarter of 2016.
Plus, other factors abroad are contributing to the problem:
In the U.S., an election year is resulting in more uncertainty than usual and a weak Russian economy is chipping away at potential London hotel guests. According to Bloomberg, U.K. visas granted to Russians fell by a whopping 38 percent in 2015.
While occupancy has plummeted, average daily room rates have remained relatively even, with hoteliers showcasing a reluctance to drop prices.
With many of the aforementioned factors unlikely to go away any time soon, it remains to be seen whether luxury hoteliers in London will be forced to drop prices to appeal to a shrinking pool of potential guests.
More by Patrick Clarke
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