Accor-owned group teams up with India Hinduja and OHLD of Spain to revamp landmark.

It was the office of former prime minister Winston Churchill during the second world war and sections of the British secret service. Now the iconic Old War Office building in Whitehall is to be transformed into a luxury hotel by Europe"s largest hotel group.

Raffles Hotels & Resorts, the luxury brand that is part of France"s Accor Hotels Group, on Wednesday announced it has signed a partnership to renovate the Old War Office into a luxury hotel. Raffles has teamed up with India"s Hinduja Group and Spanish construction company Obrascón Huarte Lain Desarrollos, which will develop the hotel. Completion is expected in just over three years.

The venture illustrates how London landmarks including Admiralty Arch and The Ned (the former Midland bank headquarters) are being reinvented as hotels. It will be the first London hotel operated by Raffles, best known for Raffles Hotel in Singapore, which opened in 1887 and was named after the British statesman and founder of Singapore, Sir Thomas Stamford Raffles. In 1915 the Singapore Sling cocktail was created at the hotel.

London"s hotels face a mixed outlook this year because of uncertainty around Brexit, concerns over terrorism and cuts to travel budgets by businesses, according to 2017 forecasts for the UK hotel industry by professional services firm PwC.

The report predicts that revenue per available room — the industry"s preferred measure — will fall 0.5 per cent this year to £114, average room prices will increase 0.4 per cent to £142 and occupancy will drop 0.8 per cent to 80 per cent. This level still remains one of the highest occupancy levels by global standards.

Accor bought FRHI Hotels & Resorts, the owner of the Fairmont, Raffles and Swissotel hotel chains for $2.9bn in cash and shares in November, to help the group expand its presence in the luxury sector, which has grown faster than the overall hiotelsmarket in recent years and where margins are higher.

In late 2014 Hinduja and OHLD bought the Old War Office, near Buckingham Palace and 10 Downing Street, from the UK Ministry of Defence for £350m. The Old War Office is a Grade II listed building that was completed in 1906. It has 1100 rooms across seven floors and two miles of corridors. Hinduja and OHLD have been granted planning permission for a multi-purpose development that includes 125 rooms (of which 40 per cent are suites), 88 private residences, restaurants and other amenities.