Renovated Savoy to open despite London’s gloomy occupancy scenario

London room rates are falling by the day. The city has dropped from the being the 2nd most expensive to visit to the 21st, according to recent rankings.

Hoteliers are slashing prices for rooms, to compete for the dwindling number of visitors that are making their way into the city during the recession. Although a recent rise in holidaymakers has been recorded, possibly because of the excellent value deals travellers can now find in the city, they haven’t made up for the dent caused by absent corporate travellers.

Into this scenario enters the Savoy, said to have received the most expensive renovation ever recorded in the UK hospitality industry. The total cost for the renovation is reported to have exceeded 120 million pounds, much higher than the original estimate of 100 million pounds. The Savoy will open its doors next April, about a year behind schedule.

The 121-year-old hotel will add a total of 268 rooms to the London market. Other hotel owners are already anxious about the impact this will have on the already tight market. The Savoy being shut for renovation since December 2007 has spelled some relief for other luxury hotel owners, as they’ve had to compete with one less hotel.

The Savoy’s management is hoping that the hotel will have missed the darkest days for London’s hospitality scenario. The hotel’s manager, Kiaran Macdonald is hoping that the economy will have sufficiently recovered by the time the Savoy reopens its doors in April.

While there have been some positive signs already, analysts have cautioned against too much optimism. Like for the airline industry, it is expected that the return of premium travellers will take a while. However, the Savoy, along with other London hotels, does have the Olympics in 2012 to look forward to.