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Hotel occupancy in March 2024 increased to 73.8% in the UK and 76.3% in London, up from 72.1% and 73.9% respectively in March 2023, according to data from RSM.
Occupancy rates have mostly returned to pre-pandemic rates, after falling dramatically to 33.5% (UK) and 30% (London) in March 2020 when the country was first put into lockdown.
Average daily rates (ADR) of occupied rooms were flat in the UK at £130.54 last month, but down from £193.87 (March 2023) to £187.08 (March 2024) in London.
However, rates remain way ahead of pre-pandemic levels and have bounced back from those seen in March 2020, at £101.29 (UK) and £153.56 (London).
RevPAR of UK hotels increased from £93.92 to £96.37 year-on-year in March, but fell slightly from £143.31 to £142.75 for London hotels.
Gross operating profits (GOP) of UK hotels reached 31.4% in March and 35.8% in London, largely in line with the same month last year.
Despite this, GOP is still lagging behind pre-pandemic levels of 35.3% (UK) and 41.1% (London).
Chris Tate, head of hotels and accommodation at RSM UK, said: “Despite an event-filled calendar in March with the Easter bank holiday weekend coming early, St Patrick’s Day and Mother’s Day, a boost for the hotel industry failed to materialise. Plus, with the increase in national minimum wage coming into play in April, hoteliers will feel an even bigger pinch on their margins going forward. However, while gross operating profits remain behind pre-pandemic levels, this is to be expected as the industry is having to shoulder much higher costs.
“There are reasons to be optimistic, particularly as UK hotels have almost made a full recovery since Covid and the first lockdown in March 2020 which had a devastating impact on the sector. Looking ahead, as the warmer days start to make an appearance and consumers’ finances continue to improve, helped by another National Insurance cut and a reduction in energy bills, we could be due a healthy uptick in the UK staycations market.”
Thomas Pugh, economist at RSM UK, added: “Despite a relatively subdued month for the hotel sector, there are good reasons to expect spending on hospitality services to continue to grow from here. First, households’ real disposable incomes are set to rise rapidly from April as inflation drops back to 2% and tax cuts kick in. This will boost overall consumer spending. What’s more, consumer confidence should continue to rise ensuring that households spend most of their new income.
“Admittedly, spending on hospitality services has been relatively strong recently when compared to spending on goods. There may be some catch up spending on retail goods over the next year, especially as goods prices look set to fall. However, the increase in consumer incomes means that even if consumers restock on retail goods, they should also increase spending on hotels and accommodation.
