Thehospitalityrebound:whyZone1–2supplyconstraintiscreatingabuyer'swindow

Post-pandemic tourism recovery combined with constrained supply in central London has created a window for hospitality acquisitions. Here's what the data shows.

International visitor spend to London exceeded pre-pandemic levels by Q3 2024, with boutique hotel RevPAR up 22% year-on-year in prime Zone 1–2 locations. Meanwhile, Grade A hospitality stock has declined 12% since 2020 — a supply-demand mismatch that's creating acquisition opportunities for well-capitalised principals.

The current planning framework favours hospitality conversion of underperforming commercial assets — but this window may narrow following the 2027 planning policy review. The data below outlines the key dynamics shaping this market.

The chart above shows a clear divergence in asset trajectories since 2022. Hospitality values, initially slower to recover from the pandemic trough, have now converged with — and in some sub-markets overtaken — broader commercial indices. The key driver is simple: constrained supply meeting structurally higher demand.

Office conversion leads the growth table at 22%, reflecting the broader structural shift away from traditional office use in central London. Serviced apartments and hospitality follow closely — both benefiting from the same tourism recovery dynamics. Mixed-use and F&B round out the picture with solid double-digit growth.

We include this Madrid comparable because it illustrates a pattern we've observed across multiple markets: transport infrastructure upgrades create step-change increases in commercial footfall. In London, the Elizabeth Line has had a similar catalytic effect on certain Zone 1–2 corridors.

Key takeaways