Unraveling the great London hotel price caper

Did Prime Minister Malcolm Fraser of Australia really pay $117 for a club sandwich here? Did a London journalist, with wife and small child, pay $475 for one night (with breakfasts and dinners) at London's InterHotel at Hyde Park Corner?

Are London hotels really the most expensive in the world?

The answers, in order, are no, yes, and probably not. But the fact that questions like these are being asked highlights one of the major worries of the British tourist industry: the increasing cost of traveling to a capital city once regarded as the bargain basement of Europe.

The Australian daily newspaper that headlined the prime minister's sandwich printed a retraction after staff at Claridge's, and elite hotel of the Savoy group, checked his bill and found it had cost him only $6.70. But "the damage," moaned Savoy group manager G. R. C. Shepard, "has already been done."

This kind of damage to the $8.3 billion British tourist industry has sent London hoteliers into a flurry of statements, newspaper advertisements, and posh press luncheons. Their point, as British Tourist Authority (BTA) chairman Sir Henry Marking says, "is that Britain still gives the best value for money in Europe."

Value, yes, but no one disputes that the "money" side of this equation has risen. The United Nations allows its personnel $96.30 a day for visits to London -- as compared with $72 for New York. Other figures indicate that Americans traveling to Britain had to pay 35 percent more in 1979 than in 1978.

Some reasons:

* The pound has grown stronger as North Sea oil makes it a petrocurrency. Meanwhile, the dollar used by the largest single group of tourists -- the 1.8 million Americans who came here in 1979 -- has weakened. As a result it takes more dollars to buy pounds than it used to.

* Inflation has driven up costs. Hotel prices, says Alan clarke of the British Hotels, Restaurants, and Caterers Association, have increased by 40 percent in the past two years. But laundry bills have risen 48 percent, staff wages 49 percent, and contract cleaning services 69 percent. Mr. Shepard agrees , noting that a pair of linen sheets (the Savoy uses nothing else) which cost $ 36 three years ago now cost $99 while a $1.25 silver-plated knife is now $6.30.

* Initial figures indicate that American tourism fell by 12 to 14 percent last year -- with everything from gasoline shortages, air traffic control problems, and a near-doubling of the value-added (sales) tax from 8 to 15 percent taking a nip at those who came. Last summer was particularly hard, with one of the city's top four tourist attractions, the Tower of London, reporting a drop in vistors during July of 25 percent below July 1978.

Why has the issue bubbled up in midwinter, the slackest of times for the London hotel trade?The main source of pressure was the respected Financial Times newspaper's annual survey, "A Businessman's Guide to Living Costs," published in January. Of the 66 cities it surveyed around the world, London was a first place as most expensive -- up from 39th only four years ago. They survey also listed the cost of a single hotel room with breakfast: $150 a night.

Tourist officials, scurrying for their ammunition, fire back that the survey was based on only three London hotels -- the very best of the new, foreign-owned ones catering largely to expense-account business. The price, they argue, is not an average -- although the public will read it as such. "It's a bit like saying that a Rolls-Royce costs $:45,000, therefore all British cars cost $:45, 000," says Mr. clarke.

Instead, he and many officials here cite figures of $45 to $56 a night as representative of the hotels and 60,000 rooms in London. Officials also point to a survey in February by the Japan National Tourist Office, which put London below Chicago, Hong Kong, New York, Geneva, Frankfurt, and Paris. And a quick survey by Mr. Shepard of 17 old, locally owned, and luxury hotels around the world in the Savoy class finds his hotels near the bottom of the price list.

Once started, however, the price-rumor machine is a hard to stop as an officious doorman. Egon Ronay, whose widely admired travel guides chart the paths of many tourists here, attributes much of the problem to be "trend setters" -- the wealthy who can afford the highest prices in London and then return home to complain about them.

His staff ferret out some of the bargains. The newly published guide to pubs (which, in the English countryside, double as diners and inns), lists rooms as low as $10 a night with an average of $16.80 a night -- including a large English breakfast. These are often rural, however, and are less helpful to overseas visitors to London, 24 percent of whom stay with friends in any case.

But London offers some innovative ways of beating prices. An eight-year-old consortium of seven hotels -- bunched together in four-story row houses in Sussex Gardens near Paddington Station -- is now offering rooms at $22.59 with breakfast. The group, called Sty-al has 115 small no-frills rooms, with a bit more character but a lot less class than the average American motel room. And with no phones, elevators, or in-room televisions.

Another option: accommodations at universities between terms. For a month at Easter, three months in the summer, and a few weeks at Christmas, the 40 universities of the nationwide British Universities Accommodation Consortium offer dormitory rooms for one night or more, and some offer apartments with kitchens by the week. Several of the London schools, such as Chelsea College and the London School of Economics, list rates that make these somewhat spartan rooms among the cheapest in London.

where does it lead? David Andrew of the Sty-al group says he notices a trend: the German market is coming up while the American and Canadian market is falling off. He also notices that the Americans he jovially refers to as "well heeled" are now more willing to compromise on hotel prices and are beginning to seek out the bargains.

One thing does seem to be changing: the image of the American tourist. He is no longer so readily envisioned as a large loud species, bedecked with cameras, wearing the national costume (jeans and a sports shirt with a small non-mammalian animal embroidered on the pocket), and awash with dollars.

Instead, he too is looking out for bargains.