PwC’s latest hotel forecast for London, published in September 2014, has been pretty accurate to date. So far, for the 10 months to October 2014, London has seen 0.3% growth, with occupancy averaging 83.3%. ADR has seen 2.5% growth averaging £140.60 across London and RevPAR has increased by 2.8% to hit £117.
According to PwC analysis, London hoteliers have seen the capital trading at a very high level and although trading wobbled a bit in the middle of the year and then again in the autumn, it seems to have picked up in the latter part of 2014.
PwC’s latest hotel forecast for London, published in September 2014, has been pretty accurate to date. So far, for the 10 months to October 2014, London has seen 0.3% growth, with occupancy averaging 83.3%. ADR has seen 2.5% growth averaging £140.60 across London and RevPAR has increased by 2.8% to hit £117.
Looking ahead to 2015, Liz Hall head of hospitality and leisure research at PwC, said: “PwC’s current hotel update -to be revised in March 2015- forecasts over 5% RevPAR growth this year. This is driven by a 1.5% occupancy increase, taking occupancy up to 84%, as the Rugby World Cup has a positive knock-on impact on demand. A further 3.6% rates advance elevates rates to over £145 and RevPAR could reach over £122. Steeper supply growth is expected to return this year as investors and developers continue to demonstrate high confidence in the capital.”
For the regions, PwC expected the recovery to continue strongly in 2014 with RevPAR up 7% to £46. So far it’s been even stronger than expected, with rates up 6.6% to September and RevPAR up 10.4% to almost £49. Most cities around the UK have benefitted – some more than others e.g. Glasgow with RevPAR up 24% post Commonwealth Games and others like Bristol, Cardiff, Liverpool and York with double digit growth so far.
Liz Hall head of hospitality and leisure research at PwC, added: “So far, the regions have seen very high growth in RevPAR from groups demand and much lower growth in transients. Despite all this, ADR remains 20% 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.
“Looking ahead to 2015 for the regions, PwC forecast further occupancy growth of 1.6% – including a lift from the Rugby World Cup taking occupancy to 76%, 4.3% ADR growth to £65 and RevPAR up 6% to almost £50.”
Supply
Overall, the general feeling is that supply is not currently an issue. However, in some areas more new hotels may exacerbate any demand weakness. We would expect the development pace to accelerate more steeply as economic growth takes hold and access to financing improves.
Meeting and conference
The conference and meeting market remains unsettled. It is an important driver of demand and food and beverage spend for hotels, but the outlook is far from fully recovered. Demand remains polarized and price aware, with residential meetings under buyer scrutiny. However, there are some signs of more relaxed corporate travel budgets and more training spend for some sectors.
Events
Great sporting events in 2014 have had a positive impact on demand and have boosted hotelier’s fortunes. We expect further growth in 2015 from demand to attend Rugby World Cup matches. The event will be held across the country in Birmingham, Brighton, Exeter, Cardiff, Gloucester, Milton Keynes, Leicester, Leeds, Newcastle and Manchester as well as London. With a third of matches set to be played on a Sunday – traditionally a low occupancy night – the event is a great opportunity for hotels.
Liz Hall head of hospitality and leisure research at PwC, concluded: “The pendulum is swinging from 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.”
Tatiana is the news coordinator for TravelDailyNews Media Network (traveldailynews.gr, traveldailynews.com and traveldailynews.asia). Her role includes monitoring the hundreds of news sources of TravelDailyNews Media Network and skimming the most important according to our strategy.
She holds a Bachelor's degree in Communication & Mass Media from Panteion University of Political & Social Studies of Athens and she has been editor and editor-in-chief in various economic magazines and newspapers.
