In his letter to the council, where Khan announced his decision, he states that one of his reasons is RKBC’s significant under-deliverance of its housing and affordable housing targets, as the plan for the site would provide 46 residential flats, whereof 9 intermediately affordable leaseholds (i.e. sold at up to 80% of full price) and 11 affordable rented (i.e. socially rented). The remaining 26 flats will be upmarket flats sold at full market price.
Another reason is that “the proposed development has the potential to make an important contribution to the delivery of enhanced visitor infrastructure to London’s visitor and business economy”, which refers to the plan’s 748 hotel rooms and 340 serviced flats for visitors. The current hotel has 906 hotel rooms, i.e. 158 more than the planned hotel, but if the serviced flats are added, the new hotel will have 182 more guest units than the current hotel.
Is it worth it?
The big question is whether the mayor will regard the addition of 182 hotel guest units and 20 affordable flats so valuable for London that it’s worth allowing the erection of two immense towers in the midst of a residential area, whereof one would become the highest building in the borough and the other almost as high as the current hotel.
To put it in some perspective, London has some 155,000 hotel rooms, and around 9,000 new rooms have been added in 2018. So, are 182 additional guest units worth the disruption and damage to the local area that these plans would cause? Also, it’s very questionable if more hotel rooms are needed.
According to a report from September 2018, by PwC (PricewaterhouseCoopers), the hotel industry is facing many challenges in the next few years. In 2019, the market is expected to be flat and the plans for new hotel rooms have been revised down so only some 4,000 new rooms are now being planned for next year. The report forecasts that RevPAR (Revenue Per Available Room) by the end of 2019 will be 1% lower in real terms from what it was in 2007. The recent years of a hotel boom seems to be over.
The uncertainty of Brexit has made the whole industry very nervous, according to the PwC report. There are already 90,000 vacant jobs in London’s hotels, and the threat of Brexit makes it much more difficult for hoteliers to attract staff from the EU – and tougher immigration rules after the Brexit implementation period may cause a sever staffing crisis for the London hotel industry.
The report warns that Brexit may also seriously dampen the flow of business visitors to London, the kind of visitors the new hotel and its annex of serviced flats will be aiming for. The only “silver lining” in 2018 for the London hotel market has been the very weak pound, which has attracted more tourists, but will tourists be as interested in coming to London after Brexit? And even if they are, most of them probably wouldn’t go for the luxury hotels – which the new Kensington Forum hopes to become – but for the kind of middle range hotels that the current hotel represents.
The PwC report ends with the following comment: “What will the next ten years bring? After a long period of open and positive relationships around the world, the skies are now darkening in the trade arena, just as Britain seeks to find a way to forge new trade relationships with other countries after Brexit. Andrew Sentance, writing in the Times on 4 August 2018, warns that a new wave of global protectionism is probably the greatest threat to economic prosperity here in the UK and across the world in the next five to ten years.”
As always, the mayor’s decision will be taken after a public hearing. The date for that hearing hasn’t been published yet, but is expected to be some time in January or February 2019. More details about the mayor’s call in can be found here.