UK hotel performance in November exceeds expectations

Hotels in the UK saw occupancy rates of 76.8% and average daily rates (ADR) £146.76 in November 2023, outperforming the same period in 2022 according to data from Hotstats and RSM.

Despite this, both categories declined compared with October where occupancy rates were at 79.2% and ADR was at £150.70.

In London, occupancy fell from 81.9% to 80.8% while the ADR of occupied rooms fell from £228.04 to £223.87.

Revenue per available room (REVPAR) declined from £119.25 in October to £112.77 in November nationally and from £186.73 to £180.81 in London.

However, REVPAR was up 7.7% (UK) and 7.1% (London) in the same period in 2022, exceeding current inflation rates.

Gross operating profits fell slightly in the UK at 37.1% (October) to 35.2% (November) and remained relatively flat in London from 42.8% to 42.0%.

Chris Tate, head of hotels and accommodation at RSM UK, said: “The hotel sector performed relatively well in November, with room rates and occupancy holding up better than expected for this time of year and particularly considering the continued squeeze on household budgets.

“This was helped by early festive celebrations and companies holding Christmas parties which provided a welcome boost to food and drink revenues. We expect this to be evident in the December results too.”

Thomas Pugh, economist at RSM UK, added: “Amid the cost of living crisis and the recent period of economic malaise, consumers have generally continued to prioritise spending on experiences, such as hotels and restaurants over spending on retail goods. Indeed, output in the accommodation and food services sector is about 2% above its 2019 level, while retail activity is about 2% below it.

“Looking ahead, the first six months of this year are likely to remain tough with high interest rates dragging on economic growth and inflation remaining well above target. However, things look brighter in the second half of this year.”