The ongoing restrictions and continuing imposition of various levels of lockdown during 2021, required by the ongoing battle to overcome the Covid-19 pandemic, posed even further challenges to the luxury hotels sector than those faced in 2020. If we thought that an initial lockdown of three months in March 2020, followed by a staggered reopening in the summer of that year meant that business would return to normal by now we were very, very much mistaken! And yet…the sector has shown a remarkable resilience and ability to adapt and face up to these challenges, which surely augurs well for 2022.
Not only travel restrictions, but complete shifts in lifestyle and working behaviours caused by the pandemic, have forced luxury hoteliers to adapt and seek out new opportunities. These shifts have also caused demand for hotels in the UK to steadily rebound over the course of the pandemic, in a trend which looks to be continuing. Pent-up leisure demand appears to be underpinning a ‘staycation’ boom with, according to Knight Frank, hotels seeing the highest level of profitability since the pandemic began in the Autumn of 2021.
It’s not just profitability which points to an increase in demand for hotels, however – there are also green shoots of the return of investment in luxury hotels. OakNorth Bank completed on a £34.3 million loan in December 2021 to a property business founded by entrepreneur Alex Shamash and joint venture partner Boscalt Hospitality. This loan will be used to convert London’s historic 15 Old Bailey into a luxury hotel with two restaurants and a bar. This is in addition to the £52 million investment facility that OakNorth have provided to 4C Hotel Group, which will enable a five-star hotel to be developed in Central London, featuring a 4,000sq ft spa and fitness studio, as well as numerous meeting and event spaces.
The fact that such large investment facilities are being provided is evidence of the confidence that investors have in luxury leisure demand being at the forefront of the recovery. Savills have also indicated that UK hotel investment is set for a plentiful year in 2022, with transactions forecast to hit £4.5billion, which is on track to beat the 15-year average of £4.22billion!
What is going to happen to the more traditional inner-city business hotel, though? Emerging options appear to include upgrading existing hotels that offer both business and leisure amenities and taking advantage of the relaxation in the planning systems to convert unused space in city centres. As an example, planning has been approved to convert Grade II listed Wood Street police station in London into a new luxury hotel which is set to have a gym, swimming pool and spa, conference and meeting rooms, plus a restaurant. The Ned in central London is another example of what can be achieved now that planning rules are more relaxed – previously B Grade office space, it has been transformed into a 5-star luxury hotel with a members’ club, 10 restaurants, gym and spa!
Small Luxury Hotels of the World is also a good example of a luxury brand which is going from strength to strength, now having 520 hotels in more than 90 countries. Hotels offered are extremely unique and on the smaller side (with just 50 rooms on average) and offer travellers the ability to experience the highest standards of luxury and guest wellbeing. Bishopstrow Hotel & Spa in Wiltshire has recently announced that it has become the first hotel in Wiltshire to be accredited by Small Luxury Hotels of the World, one of just 28 hotels in England to hold that accreditation – something which is bound to attract a flurry of bookings.
However, luxury hotels cannot just focus on offering unique stays – the sector must ensure that their physical buildings comply with higher environmental standards and carbon-neutrality and the social criteria needed to attract investors, employees and customers. With 70% of UK travellers expecting the hotel industry to offer more sustainable options it is not surprising that Booking.com has launched a ‘Travel Sustainable’ badge that will be available for any type of property that has implemented sustainable practices that meet the necessary impact threshold for their destination.
Fellow contributor, Martin Raymond also explores this ‘Regenerative Travel’ trend in his Luxury Trends 2022 article.
Small Luxury Hotels of the World has also caught onto the necessity for hotels to offer sustainable options – the ‘Considerate Collection’ was created by the brand to recognise luxury hotels which are positive members of the local community, protect and preserve cultural heritage, and maximise benefits to the environment. The Grove of Narberth in Pembrokeshire, Wales, has just been selected to be a part of the Considerate Collection community, and this is in no doubt helped by its aim of becoming net-zero in the future.
Although the continuing effects of the pandemic will pose further challenges for the sector, the track record of resilience, adaptability and creativity shown over the last 2 years surely bode well for the hospitality sector to meet whatever 2022 throws at it head on … and with confidence!
By Anthony Van Hoffen and Katie Thomas, Real Estate – Lewis Silkin
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