London Calling: Why the Capital Remains a Hospitality Powerhouse

London has long held a pivotal role in global affairs and as one of only two Alpha++ cities in the world, a ranking of global connectivity, it continues to wield extraordinary sway and influence. Despite recent global challenges, the city continues to demonstrate remarkable resilience, reaffirming its status as an international crossroads. 

The city’s ability to rebound from exogenous events has been proved out time and again. Following the Global Financial Crisis, which saw RevPAR bottom out in 2009, London completed a four-year recovery cycle, with occupancy, ADR and RevPAR all returning to pre-crisis peaks by 2013. COVID-19 ostensibly presented an even greater challenge for the international market. In spite of the headwinds, RevPAR recovered within three years through 2022 and by 2024 it sat 22% above pre-pandemic peak. This recovery captures both London's success in attracting pent-up demand and the impact of inflation (though in real terms, growth is roughly flat against 2019 levels). While these key performance metrics first exceeded their previous highs in 2022, occupancy figures continue to lag 2019 benchmarks. London's historical connections combined with its economic and cultural significance enable it to draw from a diverse and broad demand base, securing its position as Europe's most visited destination. 

This resilience is built upon London's extraordinary geographic advantage. Central London's prime location stands unparalleled in both scale and opportunity among global capitals. Encompassing the City of London and 12 Inner London boroughs, Central London covers approximately 320km² of prime real estate—a breadth that dwarfs comparable areas in other major cities. This extensive prime cityscape fuels deeper liquidity and a greater field of opportunities for investors – who often eschew secondary or even primary domestic markets in favour of London - and notably is pushing ultra-prime areas beyond now traditional hotspots like Mayfair and Knightsbridge. 

The scale becomes particularly apparent when compared to other European capitals: Paris (105km²), Berlin's Mitte district (40km²), or Amsterdam's city centre (8km²) offer significantly less prime real estate. This dynamic combination of scale and liquidity has directly translated to investment performance. In 2024, hotel investments in London reached $2.5 billion, outpacing other European cities such as Paris (+60%) and Madrid (+200%), but also the next largest global hotel investment market, Tokyo, by 25%. 

Source: JLL Research 

The European real estate debt markets have recovered significantly over the past two years with banks increasing their deployment targets while alternative lenders have benefitted from an influx of fresh capital. As financiers look to lend on real assets with strong barriers to entry and in-place cash flow to cover interest payments, lending into the London hospitality sector has become an increasingly attractive option. The captive audience for London hotel lending now includes a wide range of local UK banks, European banks, international banks (US, Middle East, Asia), insurance companies, and private credit / alternative lenders, some of whom are new entrants into the hotel lending market. 

The past 18 months have seen a marked improvement in both availability of finance and loan terms for London hotels as lenders have shifted their focus to deploying into core assets in gateway markets where London is at the forefront. Many groups have adjusted their hotel lending criteria (increased maximum loan amounts, higher LTVs / EBITDA multiples, lower minimum ICRs) to be more competitive in today’s market, resulting in a well bid marketplace in which leverage has increased by c. 5% LTV and margins have decreased by 25+bps according JLL’s debt capital markets team. 

As capital continues to flow into credit in 2025 and beyond, London hotels will continue to see strong interest from lenders and increasingly attractive loan structures. The debt markets play a crucial role in supporting larger acquisitions, with market conditions creating a favourable market window for greater liquidity into the sector. 

London's resilience is further strengthened by its exceptionally diverse international visitor base. 2024 marked a significant milestone as the city welcomed 21.7 million international visitors, up 7% compared to the prior year according to Euromonitor International. US travellers are a key source market to London, with 3.5 million arrivals in 2024 – surpassing 2019 levels by 13% and accounting for just shy of 20% of all today’s visitors - and an average spend of over £200 above the overall visitor average in 2024 according to Visit Britain.

This American-led growth reflects London's compelling value proposition compared to major US gateway cities. In 2024, London commanded a 33% lower RevPAR compared to New York ($199 vs $265), while April YTD 2025 results point to a 32% delta according to STR. This persistent value advantage and English-speaking first port of call makes London particularly attractive for US visitors headed for Europe driving increased visitation, longer stays, and greater engagement with premium experiences as travellers leverage their enhanced purchasing power.

However, London's versatility shines through in its diverseness, the roughly 80% balance of international visitors. While China and GCC countries (UAE, Saudi Arabia, Qatar) are noted for their luxury spending, European markets including Germany, France and Spain inbound consistent volume. And the visitor mix continues to evolve. India is increasingly leveraging economic ties and diaspora connections, South Korea is drawn by British culture and improved air links, while Brazil leads Latin American growth. London’s supply depth – only three other gateway cities have more rooms inventory as cited by STR – and global airlift connectivity allows the city to weather regional economic fluctuations more effectively. 

The evolution of London's hospitality sector is also being shaped by fundamental changes in work patterns. JLL's Future of Work 2024 survey reveals a significant gap between corporate policy and workplace reality, with only 21% of UK organizations mandating five-day office attendance (versus 44% globally) and just 3% of EMEA employees working in-office full-time. Average office occupancy in London rose in Q1 2025 to 42%, up from 38% in Q4 2024 and is now above the short-term quarterly occupancy average of 39% - although still below the estimated 60% level pre-pandemic - according to the latest JLL research and in-line with organisational expectations. 

This embedded flexibility has prompted hotels to adapt strategically, developing hybrid meeting spaces, workday packages, and transformed public areas designed for collaboration. 

The predominant 3–4-day office pattern (adopted by 53% of employees in the UK) has created distinct midweek occupancy peaks while simultaneously opening weekend opportunities for leisure travellers. Corporate travel's uneven recovery—with domestic trips rebounding faster than international visits—has further influenced hotel strategies, including specialised offerings for the growing "bleisure" segment combining business and leisure travel. 

The transformative impact of the Elizabeth Line has further reshaped London's corporate landscape. Liverpool Street has overtaken Waterloo as London's busiest station—a significant shift that reflects the eastward expansion of the city's business ecosystem. Hotels in previously underserved areas now benefit from improved connectivity that draws both business and leisure travellers to these emerging districts. This infrastructure development has effectively expanded London's prime hospitality territory, creating new opportunities for strategic hotel development and investment.

Group business has shown strong resilience, rebounding in 2024 to levels approaching pre-pandemic figures in terms of revenue, though this varies by hotel type. While average group sizes remain slightly smaller than pre-pandemic, higher ADR’s are compensating for the marginally lower occupancy rates. International group bookings are accelerating as some demand diverts from the US to London, with notable increases in Middle Eastern and Latin American groups. 

London's position as a global hospitality powerhouse appears secure despite ongoing challenges in the macro-environment. While global economic fluctuations will inevitably impact the sector, the city's demonstrated ability to adapt and innovate, positions it exceptionally well for future growth. A positive supply and demand picture and the combination of extensive prime territory, diverse international visitor base, and successful adaptation to evolving corporate needs creates a uniquely resilient market environment. 

Source: JLL Hotels & Hospitality 

In conclusion Christopher Exler, JLL Capital Markets remarks “while such a thing as a risk-free market does not exist, London’s fundamentals and global prestige can hedge against a lot of uncertainty over the long run and deliver attractive risk-adjusted returns opportunities for a range of investors.”