Olympic demand drives hotel shortage

By Chris Spillane

Natasha Corne is offering Olympic fans who attend this summer's London Games a piece of her backyard for about £15 ($29) a night, including a full English breakfast.

Corne, a 36-year-old healthcare worker, has already bought a blue tent to house her guests and she plans to set up a barbecue on a 163sq m plot of land in Eltham, southeast London.

"I've jumped on the Olympic bandwagon," said Corne, whose two-bedroom home is 4.8km from the equestrian-event sites in Greenwich.

"I haven't got a massive garden, but there's enough space to sleep eight."

The Olympic ritual of renting out space to visitors is under way in London after government cuts triggered the biggest drop in disposable incomes in more than two decades.

Homeowners are trying to take advantage of a hotel shortage that's allowed some operators to charge as much as double the usual rate during the Games.

About 320,000 visitors will converge on the UK capital in July, many of them competing with invitees of Britain and the International Olympic Committee for more than 140,000 hotel rooms, according to estimates by the Government's VisitBritain office.

"There are simply not enough rooms available across all price classes," said Konstanze Auernheimer, London-based director of marketing and analysis at hospitality research company STR Global. "That's why many Londoners see this as an opportunity to offer accommodation with a local flavour for less money."

Corne is one of several hundred people advertising alternative accommodation during the Games on Campinmygarden.com. Londoners are offering houses and apartments to rent on websites such as Londonrentmyhouse.com and Gumtree.com.

A six-bedroom property in Hammersmith, about a kilometre from the Earls Court sports hall where the Olympic volleyball competition will take place, is listed for £2500 ($4800) a week. A 10-bedroom Hackney Wick home, north of the Olympic Park, will cost £7500 a week.

A typical London hotel room during the Olympic Games will cost £210 a night, according to Hotels.com, a website advertising more than 145,000 hotels around the world. That compares with an average rate of about £103 at the same time last year.

By renting a furnished room, homeowners can make about £4000 without paying tax, according to Claire Evans, a director at accounting firm PricewaterhouseCoopers.

It costs £20 to place an advertisement on Londonrentmyhouse, while Campinmygarden is free.

The swell of visitors is prompting some residential property brokers in London's East End, where the 246ha of wasteland and disused railroads made way for the Olympic Park, to contact tenants before their leases are up and ask whether the space will be free during the Games.

Alan Harvey Property Services mailed renters of the properties it manages four months before the opening ceremony. It's offering two-bedroom apartments near Newham, London's poorest neighbourhood, for £2500 a week during the Games.

Those prices are as much as five times higher than typical rates, according to Jane Ingram, head of the rental unit at brokerage Savills.

The landlords are risking a void in rental income during and after the Games by seeking temporary tenants.

"We don't know if they're ever going to get that, as it's so inflated," Ingram said. "There's a lot that people need to think about that they haven't necessarily considered because they've got excited about the pound signs."

The returns for those turning their gardens into campsites won't be huge, according to Susan Goode, who's renting her garden about 16km east of the Olympic Park in Romford, Essex for £8 a person per night. She hopes to earn a few hundred pounds to pay for repairs to her garage roof.

"It's a bit of fun," Goode said. "If people want to stay, I can earn a little bit of money. I'm not going to make mega-bucks."

The competition from private individuals doesn't appear to have hurt hotel companies. The Lanesborough, a luxury hotel near Buckingham Palace, is fully booked for the Games, according to the company. That includes a suite for £14,000 a night, the most expensive in London. Intercontinental Hotels Group, the world's largest hotelier and the official hotel provider for the Games, has about 86 per cent of its rooms in London booked.

More than 90 per cent of Starwood's city centre hotel rooms have been sold, said Michael Wale, senior vice-president for northwest Europe.

"The period immediately after the Olympic Games is business as usual and we have plenty of availability," Wale said.

Travelodge, London's biggest hotelier, opened its 500th UK property in Stratford, home of the Olympic Stadium, on March 4 and plans to open another six in the city before the event.

Room rates are unlikely to rise further as hotels lower or remove the minimum number of nights required for a booking, according to Seamus MacCormaic, director of market management for hotels.com. "Demand isn't as strong as hotels may have expected," he said. "They're testing the water but still holding on to rates."

The Olympics run from July 27 to August 12, and the Paralympics last 12 days starting August 29. About 8.8 million tickets to events will be sold and will attract more visitors than other Summer Games in Europe, according to Oxford Economics.

HOUSE PRICES ON RISE

House prices in the UK will rise to levels of late 2007 before the country's economy sank into a recession, says the Centre for Economics and Business Research.

Shortage of housing relative to demand, improved affordability and mortgage availability will probably support house prices in the UK, the research group said in a report.

"House prices have been pretty stable over the past two years," said Shehan Mohamed, an author of the report. "Lending for housing was £74.5 billion ($144 billion) in 2011 and we forecast that this will rise to £109.9 billion by 2016."

It forecast house prices will rise 0.8 per cent this year, compared with a contraction of 1.3 per cent in 2011. CEBR expects prices of residential properties will increase 2.2 per cent next year, 2.6 per cent in 2014, 2.8 per cent in 2015 and 3.8 per cent in 2016.

- Bloomberg

© Copyright 2014, APN New Zealand Limited

Assembled by: (static) on red akl_n6 at 25 Jul 2014 14:36:41 Processing Time: 1108ms