Claridge’s, one of London’s most celebrated five-star hotels, has reported a loss after tax of £9.7m for 2025, reversing a £2m profit recorded the previous year.
The iconic Mayfair hotel, which opened in 1898 and expanded through a five-storey mega basement development in 2021, attributed the sharp reversal to rising payroll costs driven by government policy.
The company said the loss was “predominantly driven by the inflationary change in payroll and related costs”, pointing directly to the burden placed on the business by recent fiscal decisions.
Claridge’s warned it was “exposed to the risk of future government changes in industrial, fiscal, monetary or regulatory policies, including the adverse impact of the increase in employer National Insurance contributions and consecutive increases in minimum living wages.”
Revenue for the year came in at £137.8m, broadly in line with the previous year, though the cost of wages and employer taxes climbed by more than £1m during the same period.
The hotel, a long-standing favourite of celebrities and royal family guests, is now facing an even more difficult trading environment in 2026 following a sharp decline in visitors from the Middle East.
The outbreak of war in Iran has depressed luxury hotel bookings significantly, with tourism agency Visit Britain reporting that Middle East bookings to the UK fell to as low as half their normal rate in March.
Those booking levels have continued to lag “well behind” trend rates in subsequent months, adding further strain to high-end hotels that depend on international visitors to fill their most expensive rooms.
Claridge’s identified a range of macro risks bearing down on the business, stating: “In the short term, the biggest financial risks facing the company are rising inflation rates, interest rates, energy costs, supply chain constraints linked to the ongoing war in Ukraine, Iran and Palestine.”
The wider hotel industry has also raised concerns about proposed tourist levy powers that would allow regional authorities to impose new charges on overnight stays across the UK.
Greg Hegarty, co-chief executive of PPHE Hotel Group, said: “Hotels are dealing with substantially higher business rates and employment costs, while doing everything possible to remain competitive and minimise the impact on guests.”
Hegarty added that “adding another tax on overnight stays risks making the UK a more expensive destination for both domestic and international visitors and could ultimately weaken demand and impact employment.”
Ownership of Claridge’s is also in a period of transition following the death in July of Hamad bin Khalifa Al Thani, the former Emir of Qatar, who held a stake in the hotel through luxury property group Maybourne.
The company said ownership “will devolve to his heirs or into a vehicle for their benefit in accordance with the applicable inheritance and legal procedures”, following years of legal battles between Maybourne shareholders.
In October, Claridge’s appointed former Corinthia London manager Thomas Kochs as its new managing director, as the 128-year-old hotel, ranked 16th on the world’s 50 best hotels list, seeks to stabilise its position.