London hotels set for Olympics price spike
Olympic rings, mounted on a barge, pass the Tower of London as they move east along the Thames river to celebrate 150 days until the games begin, in London Feb. 28, 2012. (REUTERS/Ki Price)
Room rates will more than double during this Summer's Olympic Games, according to an annual Hotel Price Index.
The average cost of a London hotel room during this period will be 213 pounds a night, a 102% year-on-year increase, the survey found.
David Roche, president of Hotels.com which carried out the survey, told Reuters he would not be surprised if prices were pushed even higher, to a trebling of 2011 prices.
"Hoteliers like to hold back inventory and drip-feed it in, testing price elasticity. It remains to be seen what fraction of inventory is available," he said.
This can be a gamble -- at last year's royal wedding, says Roche, hotels got "caught red-handed" and ended up with lower occupancy.
Supply constraints have added to central London's hotel price inflation. Of London's 100,000 rooms, 40,000 were given to the Olympics organizing committee LOCOG at below-market rates -- representing more than 600,000 room nights -- although LOCOG has given 20% of them back.
Roche stressed however that room rates are approximately where they were in December 2004. "Hotels on a relative basis are very cheap (despite) strong price growth for a few weeks this summer."
To avoid the worst of central London's price inflation, Roche recommends visitors seek out hotels in satellite towns as many Olympic events take place outside the city.
Ufi Ibrahim, chief executive of the British Hospitality Association, underlined that point, telling the BBC, "Don't forget there are a further 75,000 rooms within an easy commute of the Olympic Park."
Visitors are also advised to book early. Roche told Reuters there is significant interest in London from BRIC countries (Brazil, Russia, India and China) this summer.
"Book early before a Russian gets it," he said.
The hotel price index, now in its eighth year, is based on a sample of about 142,000 properties in over 85 countries. Global room rates increased by 4% in 2011, with increases in 69 of the 88 city or resort locations analyzed.
Last year, prices fell 2% in Asia year-on-year but rose in all other areas: 8% in the Pacific, 5% in North America, 4% in Latin America, 3% in the Caribbean and 2% in Europe and the Middle East.