Hotels booming thanks to Olympics and new tourism hotel

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The UK hotel sector is experiencing its strongest performance in a decade, as the industry benefits from an Olympic boost and high visitor numbers, according to tourism experts.

London, which will host the 2012 Olympics, is benefiting the most from the resurgence and is set for a period of sustained growth in new hotel development, with 50,000 new rooms needed by 2026.

"London is booming," said James Bidwell, the chief executive of Visit London. "We are the No 1 city destination for international travel, with 2006 a record year for overseas visitors to the capital. Retail sales in central London were up 11.6 per cent on the previous year and London hotels are now experiencing their strongest performance levels since the late 1990s."

Mr Bidwell said that demand was being driven by economic growth and a strong visitor economy. "Since winning the bid for London 2012, the capital is a natural choice for major world-class events, and then there are the transport developments such as St Pancras International opening in November and Heathrow Terminal 5 next year," he said. "All of these developments improve the tourism fabric and infrastructure of the capital, including hotel development."

Alexi Hakim, the chief operating officer for the UK and Ireland at Intercontinental, which currently has 40 new hotels in development in the UK (10 of which are in central London), said that the company was seeing an increasing number of visitors to London from places other than the US, such as Eastern Europe and China, which recently relaxed its visa regulations for trips to the UK.

"We expect London will continue to be busy in the build-up to 2012, but that the extra visitors anticipated for the Olympics may themselves displace some of the city's traditional summer trade from destinations such as UAE," he said. Visit Britain predicts that the majority of future visitor growth will come from emerging markets. China, India, Russia, Brazil, Eastern Europe and East Asia currently account for 40 per cent of overseas visitor growth.

The benefit of the Olympics to the UK economy could be more than the £2bn estimated by the Government, according to a study published yesterday by the budget hotel group Travelodge. The study found that as much as £3bn could be generated by 6.6 million more visitors between 2007 and 2016. Travelodge aims to become the capital's largest hotel brand with 7,000 rooms by 2012.

The author of the report, Kurt Janson, pointed out that Sydney attracted hundreds of major conferences due to its status as host destination in 2000. In the last 20 years, London has slipped from first to 19th place in the conference league table; the Olympics could reverse this situation. "The Games is a unique marketing opportunity to reposition Britain as a must-see destination," Mr Janson added. He added that the benefits from the Games were not guaranteed, and that they required significant additional Government funding for tourism.