The townhouse and boutique segment was the highest performing sector in London during 2016, according to the annual hotel report from accountancy and business advisory firm BDO.
Hotel Britain 2017, published today, reported that rooms yield for the segment increased by 7.9% to £255.03, while international deluxe hotels were the next best performing sector with rooms yield growing by 4.7% to £149.06.
Business class hotels was the poorest performing sector with rooms yield down by 14% to £70.29
Overall, daily rooms yield across all sectors in the UK rose by 0.7% to £75.64. The marginal growth was said to be due to a slightly weaker performance in occupancy, down by 0.8% to 77.8% and a modest increase in annual average room rate, up by 1.5% to £97.28.
Average annual room rate across all sector in London increased by 1.1% to £151.45, with annual average room in the regions growing by 1.7% to £64.24.
Robert Barnard, partner at BDO, said that while the outlook for 2017 remains uncertain, he does not expect any major shocks in the year ahead.
"The impending Brexit negotiations over the coming months will shape the sector going forward. Hoteliers will need to look for both short- and long-term solutions to the potential tightening of the free movement of workers around the EU, profit margins already being squeezed by the rise in food costs and the continued growth of the sharing economy, among many other challenges."
Hotel Britain 2017 gave five predictions for the UK hotel industry for the rest of the year:
1. Hotels outperform the leisure market The numbers of overseas visitors are expected to reach a record 38 million, with foreign spending reaching record levels of £22.1b. The number of staycations are also expected to increase.
2. Change of menu for F&B There will be a focus on the profitability and popularity of menu items, which if undertaken successfully, could increase margin by 10-15%.
3. Labour crisis necessitates change With the uncertainty of Brexit, the focus will be on increased efficiencies in labour scheduling and outsourcing. In the medium term, there will be a rise in the use of recruitment agencies to assist operators in finding staff. In the long term, this will increase the use of technology and reduce the reliance on physical labour where possible.
4. Crack down on the sharing economy The UK government is predicted to introduce increased regulation this year.
5. Tensions at fever pitch between owners and operators While the brands will continue to dominate new openings and technological development, owners are expected to look at smarter ways to maximise and protect their own returns.
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