Olympic hotel investment ‘to leave a powerful legacy’

The Olympics are likely to have a long-lasting positive effect on London's hotel industry, according to PricewaterhouseCoopers (PwC).

To prepare for the massive influx of visitors to London for the 2012 Games, there has been considerable investment in new hotels and improvement to existing facilities in the capital in the run up to the event.

And this is likely to leave the industry in good stead long after the Games have finished, says Liz Hall, head of hospitality and leisure research at PwC.

"London is a city at the top of its game and the considerable investment in new hotels and improving existing ones will leave a powerful legacy for 2012 and beyond," she said.

Research by the accountancy firm shows that the luxury hotel market in London has grown by 33 per cent since the Games were announced, while the budget sector has also increased its presence with a 60 per cent increase in room supply.

As well as increasing profits for hotel owners, this could also provide a much needed boost to the local jobs market, with London hotel recruitment being stepped up to cope with extra demand during the Games.

But Ms Hall also sounded a cautionary note in relation to the effects of the Olympics, warning that an increase in capacity in preparation for the event could lead to a large "supply spike" afterwards, which, against a backdrop of a weak economy, is likely to mean a tougher competitive outlook.

"Many operators are positive about London’s prospects after the Games, encouraged by the global awareness of the capital as a destination and the ongoing improvements in infrastructure," she said.

"Others, however, have voiced concerns about the supply spike and how it will be absorbed. If there is a post-Games travel dip, trading could get very difficult – especially in East London."

However, overall the outlook for London's hotel sector is extremely positive.

"[London has] a highly profitable hotel sector and most cities around the world would love to have even a fraction of its success," added Ms Hall.

Berkeley Scott is a specialist agency providing hotel recruitment in London