Hotels sell rooms for $1.50 in London

With corporate travel budgets being slashed, business travel is down. And the economic downturn is having an impact on London hotels.

In order to keep occupancy rates up, two London hotels are offering rooms for less than two bucks.

It may sound to good to be true, but in East London, The Hoxton put 500 rooms up for sale on its Web site for $1.50 a night. That's less than the price of a latte.

Those rooms went quickly, and the next round of 500 went for $40 each. It was the case of "the fastest finger first."

"We sold out of all the rooms in 13 minutes - 7 minutes for the 1 pound rooms, 13 minutes for the 29 pound rooms. And we had a staggering just under 60,000 people trying to get those rooms, and there is a combination of bargain hunters and regular customers and people from the UK, the States, Italy, Norway -- it was a really feeding frenzy of people looking for a bargain," said David Taylor, General Manager, The Hoxton.

Every day, for a period of three months, 5 rooms are sold for $1.50 and another five for $40. You can only book one room at a time, though.

The hotel first started the sale last April, and it has become a quarterly event and couldn't have come at a better time.

"We wanted to show that budget hotels don't need to be boring. The customers are going to expect the product to remain fresh, look good, everyone is finding that things are tighter for them, so when they come here, they expect us to be doing the same - delivering great service, recognizing all of our guest and giving them more. For example - we're introducing free phone calls for our customers calling anywhere in the UK," said Taylor,

On the other side of London in Notting Hill, 3-star hotel UMI also had the same idea, offering the first night for $1.50 to frugal travelers, with breakfast included.

"People couldn't quite believe it and we had phone calls - is this really true. We did have people who were really angry because they tried a date and it wasn't available but someone had got it and we've got evidence that we had people stay. It's almost like winning a prize - it's great you basically get a free night's accommodation, breakfast, nice latte in the morning and people have enjoyed it. The past few weeks, Tuesday and Wednesday nights have been the busiest which shows that there is this shift from leisure to the business traveler," said Steve Lowry, General Manager, UMI.

Only 31 out of the 117 rooms were on sale, so there was a lot of disappointment. Fifty percent of the bookings were business travelers and 20 percent of them extended their stay.

"It's obviously a great deal for what you're paying, and it does allow you to pick up the bill where you may have been a bit more conscious of picking up the bill, especially if you are meeting your client in a high-end establishment that you know is charging ridiculous amounts for coffee and tea to start. So it's great. It puts you in a position where you can spend more on collateral things that you otherwise would be mindful of, especially in the current climate," said business traveler Anthony Ganjou.