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The Hospitality Market London hotels growth


held back by weak Euro The falling of the euro has been identified as a key issue in restraining growth for London hoteliers this year. Hotels in the capital saw a record 2014 but so far this year has not replicated this stellar performance, according to new PwC analysis.


While average performance is still very high by most global city standards, the pace of growth in London in the first half of 2015 has been mixed. PwC expects London to see occupancy growth of just 1% overall this year, taking occupancy to 84%.


Growth of 1.8% is forecast in average daily rate (ADR) to £142, partly due to the Rugby World Cup, driving a 2.7% growth in revenue per available room (RevPAR) to £119.


Looking ahead to 2016, PwC forecasts more growth but at a slower pace. The study expects occupancy growth of 0.3% to 84% and a 2.2% growth in ADR to £145. This will drive RevPAR growth of 2.3% to £122.


Liz Hall, head of hospitality and leisure research at PwC, said: “London occupancies have averaged 80% or above since 2006 and our annual forecast for 84% this year and next would be the highest this decade.


Middle market squeezed


“Growth isn’t being experienced evenly by all market segments. The recent variable performance in London in the first half of 2015 has shown some polarisation in performance with the middle segments hurting the most. Is the increase in budget rooms upsetting the apple cart in London and creating this middle market squeeze?”


Looking around the country, most cities have continued to see very strong RevPAR growth.


Overall strong trading and low supply mean that PwC expects 1.6% occupancy growth this year, taking occupancy to 76% and ADR growth of 4.6%, taking rates to £67. This mean RevPAR will grow 6.3% to £51.


Hall said: “Growth is still in the air and there is more to come, but the pace of growth is slowing a bit now in the regions. This is not surprising, we have seen 32 months of occupancy growth.


“UK occupancy levels are at record highs with ADR heading in the right direction in the regions. It’s getting harder, but even slower growth is a good result for hotels.”


PwC forecasts further growth in 2016, but just not at the same pace with a 0.6% gain taking occupancy to 77%. ADR growth is predicted to fall to 3.5%, taking rates too£69. This means RevPAR growth of 4.2%, taking RevPAR to £53.


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