The Savoy Hotel feels the pinch as London’s luxury market gets even more competitive
The Savoy Hotel is feeling the impact of an increase in competition in London’s luxury hotel market after its pre-tax loss widened during 2023, it has been revealed.
The hotel has reported a loss of £17.9m for its latest financial year, having also made a pre-tax loss of £12m in 2022, according to newly-filed documents with Companies House.
The last time The Savoy Hotel made a pre-tax profit was the £5.9m it reported in the six months to the end of 2006. In the year to 30 June, 2006, the hotel reported a pre-tax profit of £7.3m. Since then, the hotel has lost more than £534m.
For 2023, the hotel’s revenue increased from £52.9m to £63.3m.
In its latest results, The Savoy warned that the London luxury hotel market is “becoming more and more competitive” with at least 15 new hotels opening between 2023 and 2025 in the capital comprising of 2,677 bedrooms.
The hotel said that this meant that the conversion of business had “become even tougher” in 2023 and “we are seeing the effects in 2024”.
Despite the increased competition, occupant rates at The Savoy Hotel increased from 50 per cent to 59 per cent in 2023. However, the average room rate dipped from £714 to £711 in 2023.
The hotel generated a revenue of £40.8m from rooms in the year, up from £34.9m, while it received £19m from food and beverage, a rise from £15.2m.
During the year the average number of people employed by the hotel increased from 436 to 500.
US and Middle East guests boost The Savoy Hotel
The Savoy Hotel is partly owned by Kingdom Holding Company in Saudi Arabia, Fairmont Hotels and Resorts and Katara Hospitality, which is owned by the government of Qatar.
A statement signed off by the board said: “There was a strong improvement in performance during 2023.
“Room revenues continued to grow reaching record levels.
“The average room rates stayed at similar levels to 2022 with occupancy increasing by 18 per cent.
“The hotel continued to benefit from strong transient demand supported by improving sales with corporate business and the impact of the coronation.
“The first quarter of the year was impacted by a backdrop of cost-of-living increases, interest rate rises and travel strikes making for a weaker start in 2023.
“However, a strong dollar to pound exchange rate and more aggressive sales and revenue strategies helped the US market climb to near pre-pandemic levels and also led to an increase in Middle East business.”
The Savoy Hotel added that its restaurants collectively performed strongly in 2023 contributing to overall operating profitability.