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Average daily rates for occupied rooms in the UK rose to £128.94 outside of London and £196.26 inside of London, an increase of 13% for both, according to data from RSM and hotstats.
According to the latest CGA data, sales at Britain’s leading managed restaurant, pub and bar groups were only 3.9% ahead of last year in February, suggesting the hotels sector is more resilient than the wider hospitality sector.
Occupancy rates of UK hotels were up from 56.1% in January to 64.3% in February and increased from 57.7% to 63.8% in London.
However, these still remain lower than pre-pandemic levels of 69.6% in the UK and 69.8% in London in February 2020.
RevPAR increased from £68.24 to £82.97 in the UK and from £107.03 to £125.31 in London. This is a much bigger improvement from the usual January dip than in pre-pandemic years.
Furthermore, the gross operating profits of UK hotels were up nearly 7% to 24.4% last month and were up 6% to 31.6% in London.
Chris Tate, head of hotels and accommodation at RSM UK, said: “With the cost-of-living still hanging on consumers’ shoulders and budgets continuing to come under pressure, consumers are choosing to spend their money differently. During the pandemic, they stocked up on products, but it was the experiences and trips away that they missed out on, which they are now prioritising.
“While the hotels sector is not quite out of the woods yet as it tries to get back up to pre-pandemic occupancy levels, consumer confidence is improving, in-person events are continuing to make a comeback and with Easter and three bank holidays in May coming up, there are certainly pockets of optimism on the horizon for the sector.”
Thomas Pugh, economist at RSM UK, added: “Even though the economy has shown a remarkable degree of resilience lately, households’ real incomes in 2023 are set for another sharp drop in the first half of 2023. That means that consumer spending will also probably drop after the 1% q/q fall in Q3 2022.
“As you might expect, spending on most discretionary areas, such as clothes and household goods, has fallen sharply recently as the cost-of-living crisis has caused consumers to cut back. However, more surprisingly, spending on hospitality services has continued to grow over the last three quarters, despite the huge headwinds as consumers have favoured experiences over goods.”
