London has a glut of luxury hotels.

London hotels are bracing themselves for the biggest luxury room openings in more than a decade this year, amid a competitive market where supply and price cuts are a concern.

The 146-room Chancery Rosewood will open in the summer at the former US Embassy in Grosvenor Square, while in 2025 Six Senses will launch a new hotel in the former Whiteleys department store in Bayswater.

At the same time, luxury operator Auberge Resorts Group will open the 102-room Cambridge House in Mayfair, an indoor and outdoor naval and military club, and other launches in the city.

The blast comes after renovation projects such as the 50-room Mandarin Oriental Mayfair and Park Hyatt London River Thames opened in 2024, as well as the Savoy and London Hilton on Park Lane.

The opening By 2025, they will provide 757 new luxury hotel rooms in the Greater. LondonThe biggest annual increase since 2014, according to an analysis of figures from data provider AM:PM Hotels by real estate group Savills. The total number of luxury hotel rooms increased by 4 percent to 19,535.

“In general, demand in London is weak, but supply (in the city) is increasing. So it’s a perfect storm,” said Gianluca Muzzi, chief executive of the Maybourne Hotel Group, owner of Claridge’s, whose average daily rate is £1,800.

Maybourne chief executive Mark Socker said, citing last year’s Paris Olympics and the UK government’s reluctance to restore duty-free shopping, “a number of things may have kept people from coming to London”.

Savoy managing director Frank Arnold said the five-star hotel was forced to drop its daily rates below £1,000 by 2024 after experiencing a 5 per cent drop in occupancy in the first quarter.

Supply in London continues to expand at an “unprecedented pace”, risking a “slight dilution of demand”.

High-end hotels around the world have particularly benefited from the post-pandemic travel boom, with the exception of London.

Luxury hotels in the UK capital account for 16 percent of the more than 110,000 hotel rooms, according to AM:PM. Between 2019 and 2023, their average daily unit will increase by 42 per cent, according to CBR, compared with a 27 per cent increase for the whole London market over the same period.

The real estate agency said the sub-sector has attracted wealthy travelers from the US and the Middle East, with King Charles’ coronation in May 2023 providing a further boost.

Kenneth Hatton, head of hotels in Europe at CBR, said: “While Paris and Milan – which are VAT-free for international visitors – are increasing prices every day, London is by far the most visited city in Europe, and I feel good about London’s luxury sector.”

He said it was helped by increased demand from “high-net-worth individuals” – those with a net worth of more than $1mn worldwide.

“Luxury hotels that stand the test of time retain their class, accept a slightly lower occupancy,” and performance will eventually “step up,” Hutton said.

“Fear of oversupply” is the wrong word, says Richard Cooke, general manager of the Brown Hotel in Mayfair, London’s oldest hotel. . . I knew what was going on (and) what you had to change because you knew it was coming.”

Built in 1832 and owned by Sir Rocco Forte, the five-star flagship has recently undergone a series of renovations, showcasing a new collection by English fashion designer Paul Smith, whose items can be purchased by guests. A new spa and renovated fitness center will open in the next 18 months.

Cook said the changes are meant to “enhance the guest experience,” but “if there’s oversupply and demand . . . In 2021, you will see price changes to restore VAT-free shopping, which was discontinued.

The UK Treasury, which said before approving the plan that duty-free trading was a costly system, has no plans to introduce a new framework in Great Britain, told the Financial Times in a statement.

Marie Hickey, director of business research at Savills, said luxury hotel openings have increased over the past few years, with suppliers focusing on collections that have been limited in London compared to rival cities such as Paris.

“We don’t think (the openings) will have a detrimental effect (on the market), because it will only raise the average daily rate,” he said.

But in the short term, hoteliers are navigating increasing market pressures, especially as room rates begin to normalize after last year’s jump. Promotions such as four nights for three are on the rise, industry figures said.

Maybourne – which Socker says has invested “hundreds of millions of pounds” as part of Claridge’s seven-year renovation – last year opened the Emory, where every room is a collection.

Arnold at the Savoy said that the first of the renovations to the rooms, expected to be unveiled in the summer of 2025, will feature fewer rooms, which has helped to “facilitate a more balanced erosion (and) faster recovery of the remaining stock.”

“There will be a slight decline in the next two or three years to absorb the new supply, but gradually things will improve,” he said.

Other hotel groups are more confident in the recent outlook of London’s high-end market, American hospitality company Hilton plans to open the first Waldorf Astoria in the capital’s Admiralty Arch in 2026.

Simon Vincent, president of EMA at Hilton, said people are “still in a post-Covid high when it comes to travel. London has enough unique features to continue as a luxury destination, and they are here to stay for a while.