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Surge in RevPAR for Hotels in London

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While many of the rest of the world's hotels have struggled to rebound from the global economic downturn, London hotels have defied expectations as rates and occupancies continue to grow, with July 2010 recording the highest achieved RevPAR reported during the past 11 years in London.

STR Global reviewed London's monthly RevPAR from January 1999 to August 2010, and while there is no surprise that 2010 has been a stronger year than 2009, it is still a fantastic achievement for London hoteliers to produce their best performance of the past decade during a year of recovery.

A weaker pound and more favourable exchange rates helped to attract tourists from mainland Europe, North America and the Middle East. During July, hotels in the capital also benefited from the biennial Farnborough Air Show-attended by more than 220,000 visitors.

There are uncertainties on the horizon for London, however. With between 20% and 30% of U.K. hotel business driven by the public sector, undoubtedly there will be an impact on London hotels as the government's era of austerity begins to have an impact and the threat of a double dip recession remains. There is also uncertainty over how the planned APD (Air Passenger Duty), which is scheduled to come into effect on 1 November 2010, will impact travel patterns.

This will be coupled by an additional 5,000 rooms, which are expected to open before the Olympic Opening Ceremony, increasing supply in an already congested market place.

Despite the challenges, there always will be demand for London in both the corporate and leisure markets. As a world-class city with global attention growing in the build up to the Olympics during 2012, the challenge for London's hoteliers will be whether they can maintain the momentum of their current remarkable performance. August 2010 delivered a strong performance with 82% occupancy and an ADR of GBP107.

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