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The past year has been an interesting one, with leisure travel demand softening but business demand improving. With the purse strings expected to be tighter, the guest segment is expected to change according to STR’s latest Independent Hotel Show report.
I
n 2023, year-over-year comparisons regained significance, particularly after the first quarter when Omicron comparables were no longer a
factor. Notably, independent properties in London consistently outperformed across top-line metrics for the first eight months of the year, a trend mirrored by branded properties, with a more pronounced increase in average daily rate (ADR). The Regional UK market also experienced year- over-year growth, albeit more modest, particularly in independent properties when examining ADR. Brands in this market seem to have achieved a more balanced growth between occupancy and room rates. It’s crucial to highlight that STR estimates that approximately 4–5% (equivalent to 30,000– 35,000 rooms) of the Regional UK’s 714k-room inventory are currently in use for humanitarian aid. Interestingly, the impact on occupancy is relatively muted, given that many of these properties
London August 2023 YTD versus August 2022 YTD Independent
Occupancy 74.2% Average daily rate £254.51
Revenue per available room £188.86
+17.6% +13.6% Occupancy Source: STR
Regional August 2023 YTD versus August 2022 YTD Independent
Occupancy 67.6% Average daily rate £127.04
Revenue per available room £85.91
Branded Occupancy
76.7% Average daily rate £84.13
Revenue per available room £64.49
+15.6% +7.5% Occupancy Source: STR
+1.9% ADR
+9.5% +6.4% RevPAR Occupancy +8.6%
+3.5% ADR
+11.9% RevPAR Occupancy +12.9%
Branded Occupancy
79.5% Average daily rate £181.95
Revenue per available room £144.65
+26.4%
historically have lower occupancy rates and have not actively participated in STR benchmarking.
Day-of-week patterns and recovery trends
Day-of-week patterns indicate general similarities between independent and branded properties, but differences emerge when assessing recovery to 2019 levels. Shoulder days (Sunday and Thursday) yielded the most significant occupancy gains for independent properties throughout the year. However, shoulder levels dipped during the summer, while weekends (Friday/Saturday) gained momentum. Weekdays (Monday to Wednesday) and primarily those aligned with corporate demand experienced substantial recovery early in the year but took a step back during the leisure-heavy summer months. In contrast, branded properties did not exhibit the same weekend momentum, mostly levelling off during the summer. Moreover, weekday occupancy in branded properties has maintained consistent recovery levels since May, distinguishing them from independents. Analysing segmentation data reveals that transient demand (bookings of less than ten rooms per night) is firmly in recovery territory in both London and the Regional UK market. Notably, groups (ten or more room nights) show momentum in the Regional UK market but lags significantly behind in London.
ADR RevPAR
Outlook for London and the Regional UK market
ADR RevPAR
London continues to be a sought-after destination for both domestic and international demand, with a substantial return of the latter during the summer, attributed to Americans traveling to Europe. Although leisure demand is softening, the improvement in the corporate segment is expected to sustain growth into 2024. In the Regional UK, projected occupancy gains are supported by anticipated longer-term economic improvement across the UK, encompassing cooling inflation and rising GDP growth from 2025 to 2027. Expectations for longer-term ADR growth have improved as economic headwinds have moderated, with rates unlikely to reset or decline. ●
10 Hotel Management International /
www.hmi-online.com
Golden Dayz/
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