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Occupancy gulf between London and regional hotels widens

30 January 2019 by
Occupancy gulf between London and regional hotels widens

The gap between London hotels and the rest of the UK widened in Q4 2018, as occupancy in London rose 5% year-on-year compared with 1% in hotels outside the capital.

Average room rates in London also rose 5% to £157.20 in Q4, boosting revenue per available room (revpar) by 10%, according to the UK Hotel Market Tracker: Q4 2018 produced by HVS London, AlixPartners and STR. Revpar growth in London for the full year was 3%.

Hotels in the regions didn't see any growth in average room rates or revpar in Q4. For the full year revpar grew by 2%, held back by an increase in supply.

HVS chairman Russell Kett said: "For the UK's hotels Q4 was a very different trading picture in London compared with outside the capital.

"Hotel supply outside London grew 1.8% in Q4 of last year, causing supply to exceed demand. As a result of more intense competition, operators were unable to lift average room rates.

"While supply growth was also strong in London at 2%, demand resulting from a number of high-profile events boosted visitor numbers and meant that in Q4 London's operators were able to mitigate the impact of the increasing number of hotels rooms available."

Supply is expected to grow further in 2019 across the UK, with a 4% rise in inventory in the capital and a 3.3% supply growth outside London.

Kett added: "This increase in supply to the UK market means that hotel operators will have to work harder to boost their average daily rates unless demand for rooms grows significantly. This, as well as rising costs and the impact of Brexit, means that 2019 will be another tough year for hotel operators."

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