London hotels struggle as Birmingham booms

By Sophie Witts contact

- Last updated on GMT

The AC Hotel Birmingham opened in May
The AC Hotel Birmingham opened in May

Related tags: Hotel, United kingdom

London hotels continued to struggle in the second quarter of 2016, while Birmingham saw record growth, according to the latest HVS Hotel Bulletin.

Hotel occupancy in the capital fell for the sixth consecutive quarter, with HVS predicting the market would remain subdued following the Brexit vote.

RevPAR in London dropped by two per cent year-on-year as average room rates declined for the second quarter of 2016.

While RevPAR grew by an average of just two per cent across the UK, performance varied dramatically across the country.

Birmingham boom

Outside the capital Birmingham saw the biggest growth, with RevPAR up 16 per cent.

It comes after the city was named the UK’s fastest growing regional tourist destination in 2015.

A separate study by STR Global found that hotel occupancy rates in Birmingham reached 75 per cent between March and May 2016 – the best result in 13 years.

It follows the opening of a £50m Park Regis hotel in March​ and the UK debut of Marriott International's AC Hotel brand in May.

Mixed growth

Bath saw RevPAR rise 11 per cent due to an influx of international visitors, while in Newcastle there was a four per cent decline following a ten per cent increase in hotel supply over the last year.

Further north Aberdeen’s troubled hotel sector continued to suffer, with RevPAR falling 24 per cent year-on-year with the sector hit hard by falling oil prices.

HVS chairman Russell Kett said future growth depended on the UK remaining an ‘investor-friendly market’ following its exit from the European Union.

“The Brexit decision is having the double-impact of weaker sterling and a reduction in anticipated economic growth,” said Kett.

“This is both good, and bad, news for the sector in that Britain becomes a cheaper destination for overseas visitors, dampening outgoing UK travel but potentially increasing the F&B costs as some suppliers pass on price rises.

“Hotel transaction activity is also likely to slow down as investors assess the outlook of future trading but in the longer term we are optimistic the UK will remain an attractive source of investment for global investors.”

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