Glasgow, Bristol, Cardiff, Liverpool and York are some of the regions recording double-digit growth in the hotel rates. London, according to PwC research, is on a more modest upward curve with the capital’s hoteliers enjoyed a pick up in trade in the latter part of 2014.
Tax and financial advisory services specialists PwC’s latest analysis of London’s hotel rates discern an upbeat finish to the year and contrasts the trend with a trading ‘wobble’ through the middle of last year and into the autumn.
For the 10 months to October 2014, London saw 0.3 per cent growth, with occupancy averaging 83.3 per cent. ADR recorded 2.5 per cent growth to average £140.60 across London and RevPAR increased by 2.8 per cent to hit £117.
Looking ahead to 2015, PwC head of hospitality and leisure research, Liz Hall (pictured) said: “PwC’s current hotel update – to be revised in March 2015 – forecasts over five per cent RevPAR growth this year. This is driven by a 1.5 per cent occupancy increase, taking occupancy up to 84 per cent, as the Rugby World Cup has a positive knock-on impact on demand. A further 3.6 per cent rates advance elevates rates to over £145 and RevPAR could reach over £122.”
PwC expects steeper supply growth to return this year with investors and developers demonstrating confidence in the capital.
For the regions, PwC expects the recovery to continue strongly in 2015 with RevPAR up six per cent to £50 and further occupancy growth. This comes on top of a RevPAR growth of over 10 per cent in 2014. Most cities around the UK have benefited – some more than others e.g. Glasgow with RevPAR up 24 per cent post Commonwealth Games and others like Bristol, Cardiff, Liverpool and York with double digit growth so far.
Hall adds: “The regions have seen very high growth in RevPAR from group demand and much lower growth in transients. Despite all this, ADR remains 20 per cent below its 2007 level and though rates are rising at last in the regions, where we are seeing stabilisation, it’s a long road to get rates back in real terms.
PwC forecasts further occupancy growth of 1.6 per cent, including a lift from the Rugby World Cup, which is forecast to take occupancy to 76 per cent.
PwC says the general feeling is that supply is not currently an issue in the regions although the UK conference and meeting market does remain unsettled, with demand remaining polarised and price aware. Residential meetings are still under buyer scrutiny, although PwC reports there are signs of more relaxed corporate travel budgets and more training spend for some sectors.
Hall says the latest PwC research leads her to conclude: “The pendulum is swinging from a buyers to a sellers’ market where hotels have more power to dictate prices and policies with some hotels reportedly trying to negotiate double digit increases. Add on ‘Extras’ like cancellation charges are becoming more common.
“The UK economic recovery is gathering pace and should bring good news for London and regional hotels as travel and consumer confidence pick up. However, the hotel sector does face ongoing geopolitical uncertainty, both in the UK and further afield, as well as other challenges.”
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