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London's Luxury Hotels Slash Prices Amid Economic Uncertainty
8 Aug
Summary
- Luxury hotels in London recalibrating prices due to increased competition
- Prices down 20-50% compared to 2024 at top hotels
- Decline driven by global economic uncertainty, not just supply and demand
As of August 8th, 2025, London's luxury hotel market is undergoing a significant shift, with prices at top properties dropping sharply compared to the previous year. The post-COVID "revenge travel" boom that drove up rates has given way to a market correction, as heightened competition and economic uncertainty dampen demand for high-end hospitality.
The five-star Raffles at the OWO, which made headlines with its £1,100 starting price when it opened in 2023, now offers basic rooms for £880 – a 20% discount. Similar price drops are seen across other premier hotels, such as the Peninsula London (down from £1,300 to £900) and the Emory Hotel in Knightsbridge (down from £1,600 to £936).
Even established icons like the Dorchester have recalibrated, with room rates falling from over £1,000 last year to £750 currently. Industry data shows that average nightly rates at five-star London properties are anywhere from 20% to 50% lower than the same period in 2024.
Experts attribute this trend to a combination of factors, including the influx of new luxury openings driving up competition and global economic uncertainty making it difficult for the travel industry to sustain the record-breaking figures of the past few years. The ramifications are most pronounced at the highest end of the market, as aspirational travelers scale back their splashiest plans in favor of more moderate budgets.
