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London expected to record Europe's second highest occupancy rate in 2017

06 March 2017 by
London expected to record Europe's second highest occupancy rate in 2017

The ongoing decline in the value of sterling is expected to drive up UK hotel occupancy and room rates over the next two years, according to accountancy firm PwC.

In the European Cities Hotel Forecast, London is predicted to achieve revenue per available room (revpar) growth of 3.3% to £120 and 2.5% to £123 in 2017 and 2018 respectively.

Meanwhile, average daily rates are expected to increase by 2.4% to £146 and 2% in 2018 to £149, with occupancy growing 0.9% this year to 82%, with a further 0.5% gain next year.

London is expected remain just behind Dublin, which is forecast to achieve an occupancy rate of 83% this year, in the league table of European city occupancy rates, followed by Amsterdam on 78%,

Despite a slower start for hotels outside London in 2017, PwC has forecasted hoteliers to see revpar growth of 3% to £54, driven primarily by an average daily rate of £71, the highest ever in nominal terms. Occupancy in the regions is expected to show muted growth during 2017 (0.1%) and 2018 (0.2%) to 76%.

This year is forecast to be a bumper year for new openings, with the addition of 20,000 new rooms across the UK, up from 16,000 in 2016. With the expected closure of a number of hotels, the overall capacity could expand by 12,000 rooms, a growth of 2.4%.

Liz Hall, head of hospitality and leisure research, PwC, said: "The effects of a weaker pound were finally felt by hospitality businesses towards the end of 2016 with inbound holiday tourism soaring.

"Hotel revpar in London increased by 14.3% year-on-year in December which according to STR data is the biggest year-on-year growth since the 2012 Olympics. It was a challenging year until then.

"We expect inbound holiday growth to continue in 2017, as the capital provides improved value for money. Staycations from UK residents may also lift performance as some opt against going overseas as an expected squeeze on living standards begins to bite."

Hall predicted that hotels will benefit during 2017 from events such as the ICC Cricket Champions Trophy, the World Athletics and Para-Athletic Games in London, and the UEFA Champions League final in Cardiff in June.

PwC predicts record occupancy levels for provincial hotels >>

London forecast to achieve Europe's highest hotel occupancies in 2016 >>

Slower rate of growth predicted for hotels in 2016 >>

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