London hotel occupancy slides as Iran war wreaks travel havoc
International travel chaos caused by the Iran war is beginning to hit London’s hotels, fresh data has found.
The occupancy of London’s hotels fell year on year in March, according to audit firm RSM.Hotel experts attribute the decline to a fall in tourism.
Luxury London hotels enjoy a huge amount of custom from Middle Eastern visitors, and the region also plays a key role as a stop-off point for tourists visiting Britain from Asia.
The Iran war has wreaked havoc on travel between the Middle East and the UK, with Heathrow airport reporting a 51 per cent drop-off in passenger traffic along these routes.
Chris Tate, head of hotels at RSM, said: “The immediate impact of the Middle East conflict has started filtering through to the hotel industry, with London occupancy taking a hit.
“Ongoing travel disruptions will have inevitably put a stop to some international tourists’ plans, while business trips may have also been put on hold.”
‘Prolonged disruption’ possible
The occupancy of London hotels fell from 76.3 per cent in March 2025 to 74.8 per cent at the same time this year, according to the audit firm’s data.
Despite the drop-off in stays at hotels in the capital, the average cost of a room is rising above inflation, up five per cent year on year to £190.24.
Tate said this is a “reprieve” for London’s hoteliers, who will otherwise be bracing for “prolonged disruption to the travel and hotel industry”.
The Middle East is a key stop-off point for many London-bound tourists but also brings a huge number of wealthy visitors direct from countries like the United Arab Emirates and Saudi Arabia.
One former employee of a West End hotel told CityAM it was “not unusual” for Middle Eastern families to book out entire floors during the summer months.
Clermont sees ‘shift’ in global travel
Clermont Hotels Group, which runs a number of luxury hotels in central London, told CityAM it has seen a drop off in demand for some of its properties due to the Middle East conflict.
Stuart Yeates, Clermont’s chief commercial officer, said: “As with the rest of the London hotel market, CHG has seen a shift in international travel and consumer behaviour due to the situation in the Middle East.”
But Yeates said Clermont group’s portfolio has not suffered overall because of the war, with its hoteliers optimistic that travel conditions have begun to “stabilise”.
The leaders of some of London’s glitziest hotels reportedly met recently to discuss the “phenomenal” impact of the war on their custom.
Stuart Procter, chief executive of the Beaumont in Mayfair, told the Financial Times he and his counterparts at other luxury residences “rely on the UAE coming to town”.
Hotels battle business rates
Yeates, and other industry figures, said they are optimistic that travel from the Middle East will normalise before the summer, which is a key period for tourists looking for relief from the intense heat in the region.
Kate Nicholls, chief executive of leading trade body UK Hospitality, told CityAM: “Ongoing conflict in the Middle East has inevitably led to travel disruption, with knock‑on impacts for inbound tourism and accommodation providers in the UK.
“This is landing at a time when hospitality already faces the highest tax burden of any sector, with rising costs putting intense pressure on businesses.”
The business rates bill for the average hotel jumped by £28,900 – or 30 per cent – in April and will have climbed by £111,300, or 115 per cent, by the end of the decade.