'Megacities' enjoy strong ARR growth

By Carina Perkins contact

- Last updated on GMT

Hotel room rates continue to rise, with London, Aberdeen and Glasgow enjoying particular growth in H1 2014
Hotel room rates continue to rise, with London, Aberdeen and Glasgow enjoying particular growth in H1 2014

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Global hotel room rates continued to climb in the first half 2014, with the UK enjoying a ‘very positive’ six months, according to the latest Hotel Survey from Hogg Robinson Group (HRG).

According to the survey, growth was particularly strong in ‘megacities’, with 31 out of the top 50 cities seeing an increase in local average room rates (ARR) and occupancy rising in key business destinations.

In the UK, eight out of the 10 cities surveyed enjoyed an increase in ARR, compared to just three in the same period last year. HRR said this indicated a recovery in demand ‘due to increased business confidence’.

The report put ARR growth in Aberdeen down to the ‘booming’ oil and gas industry and lack of bed stock, although it noted that a number of new hotels will open in the Scottish city later this year and in 2015.

“It will be interesting to watch the effect this has on supply versus demand,” said HRR.

London moved up to 12th​ place from 22nd​ in last year’s survey, and HRR said the ‘modest but steady’ ARR growth in the Capital was driven by ‘the resurgent banking and financial sectors'.

Glawgow benefited from increased corporate demand and the the Commonwealth Games, although HRR pointed out that several mid-scale and budget openings are planned over the next 12 months, and questioned whether the city would experience a ‘post games hangover’.

Commenting on the results of the survey, Margaret Bowler, director Global Hotel Relations at HRG, said: “Our Interim Hotel Survey highlights once again that Megacities are continuing to lead the way, resulting in regional trends becoming increasingly less meaningful.

“Demand is still growing and is yet to peak and with occupancy at record levels in the top business destinations, hotels are feeling confident in the strength of the market.”

HRG-survey
Source: HRG Interim Hotel Survey, September 2014

UK room rates

Earlier this month, Hotels.com’s Hotel price Index (HPI)​ revealed that UK hotel rates rose twice as fast as the global average in the first six months 2014.

According to the data, UK hotel rooms in the country averaged £93 in H1 2014, compared to £86 in 2013.

London room rates rose 9 per cent to £127 a night on average, while Edinburgh rates were up 7 per cent to £102.

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