London Room Shortages Loom For 2012 Summer Olympics

Travel buyers can expect ultra-high hotel rates in London during the 2012 Olympics and should start negotiating with suppliers now to secure availability, according to a white paper published this week by British hotel booking agency Hotelscene.

Hotelscene reported that the organizing committee for the games has booked 50,000 rooms at 260 properties in London during the event, which takes place from July 27 to Aug. 12, 2012. That represents 65 percent of the available inventory for the duration, leaving corporate buyers to compete with other prospective guests for just over one-third of the usual bed stock. With London close to 100 percent occupancy during a normal summer, and only a limited number of new hotels opening before 2012, Hotelscene warned, "there will be significant pressure on inventory and pricing for at least four months."

However, Hotelscene director of business development Jean Squires advised against buyers attempting to solve the problem by negotiating two-year deals now. This strategy will fail because hotels already are imposing either blackout dates or specially created "high season" rates on corporate agreements for the Olympic period. "If you do need inventory during the period, then ask for a high season rate rather than blackout dates," she said. "This will give you the opportunity to negotiate to some extent but, more importantly, should mean that there is an element of inventory available to you—albeit at a higher rate."

Corporate clients able to book meeting space as well as beds will be the most likely to secure rooms, Squires added.

Hotelscene also urged travel managers during the Olympics to watch out for unusual cancellation clauses, consider a ban on nonessential travel and book long-stay accommodation that can be shared among employees.