UK hotel growth set to continue into 2016
PwC’s predicted that London RevPAR will rise 4.6 per cent in 2015, driven by occupancy growth of 1.6 per cent to 84 per cent - the highest level for 20 years – and ADR gain of 3 per cent to £144.
The capital should achieve further RevPAR growth of 4.7 per cent in 2016, although with occupancy already at nearly 85 per cent, this will be driven ‘almost completely’ by ADR gain of 4.4 per cent to £151, said PwC.
PwC predicted that occupancy in the regions will hit a record 76 per cent in both 2015 and 2016, with ADR expected to grow 4.4 per cent and 4.6 per cent respectively. As a result, regional RevPAR should rise 5.4 per cent in 2015 and 5.1 per cent in 2016.
Strong trading performance will drive above average supply growth of 4.5 per cent in London and 2 per cent in the regions in 2015, with London, Manchester, Edinburgh, Birmingham, Aberdeen, Glasgow, Newcastle, Liverpool, Cambridge and Bath among the UK cities with the most active room pipelines.
In London, an additional 6,430 rooms could open this year, taking the capital’s supply to over 136,000 rooms. In the regions, a potential 9,420 additional rooms would take total the supply to around 467,700 rooms.
Geopolitical risks
However, PwC warned hotel growth in the UK and the rest of Europe would depend on the ‘constantly changing balance of global growth and geopolitical risks’, which will have implications for the global economy, and therefore tourism, in 2015.
Liz Hall, head of hospitality and leisure research at PwC, said: “The hotel sector faces plenty of challenges and geopolitical uncertainties. But we are optimistic in its ability to compete, adapt and succeed; especially now economic fundamentals of rising prosperity and increased globalisation have re-asserted themselves following the financial crisis.
“There are new trends that hoteliers need to consider and start to adapt to in 2015 and beyond. For example, the increasing potential for hotels to use robots and Artificial Intelligence to cut costs and improve the customer experience and to introduce new smartphone enabled technology (such as iBeacons). With pressure on rates continuing, we expect hotels to continue to find innovative ways to reduce costs in order to maintain their margins and customer experience.”
