The tourism boom that has benefited the UK hotel sector is expected to slow down this year along with hotel performance.
This is according to the UK hotel market outlook report by independent commercial property agency GVA, which suggests the rallying of Sterling against the US dollar could spell the end of the two year boom.
Combined with an increased supply of new rooms, the rise in hotel performance could also slow, meaning the outlook in 2018 remains positive, but more moderate.
The report goes on to say that consumer confidence has improved slightly this year. Although is still in negative territory, households appear to be more upbeat with the expectation that inflation will ease and earnings growth will pick up in 2018.
The Treasury consensus forecasts economic growth to slow to 1.4%, however the report says it looks "likely" 2018 will mark "the bottom of this economic cycle", assuming the Brexit talks result in a reasonable outcome for the UK.
The report also says rising revenue per available room (revpar) will continue to support development activity and "bring more areas into scope", and regional city occupancy levels are "forecast to remain unchanged".
International buyers have been prominent and countries such as South Africa and Sweden have increased their presence in the hotel investment market. GVA says yields are likely to increase in line with marginal improvements in average daily rate and revpar, and despite ongoing pressure on margins, it expects the hotel investment market to remain strong in 2018.
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