Q1 hotel performance dips amid late Easter and budget pressures

Preliminary first-quarter 2025 revenue per available room (RevPAR) results have pointed to softer trading performance for UK hotels, according to new CoStar data. The report stated that cooler demand patterns adversely impacted revenue results as 2025 began. Despite a slightly stronger January, RevPAR started to trend downwards from February, with rates starting to decline first. March posted the “weakest” results as occupancy and rates witnessed year-over-year drops. Easter calendar shifts further exacerbated March results. In 2024, the Easter holidays fell on the last weekend in March, while this year, the holiday period has shifted by about three weeks, with school holidays starting in the second week of April. As a result, April is likely to experience “stronger” trading compared with last year, as last April was adversely affected by bad weather and the Easter shift. The data also highlighted that movement in holidays and better weather during the first half of the month could translate into stronger trading this year. However, according to Visit Britain’s domestic Easter trip tracker, slightly fewer people responded positively to taking a trip during the Easter break than the previous year, which could negatively affect the hospitality sector. Additionally, CoStar’s data revealed that an “uncertain macroeconomic environment” and “subdued business confidence” may have affected trading in recent months. Weekday performance has been weakest, experiencing sharper year-over-year declines on Sundays through Thursdays. However, while weekend trade has been slightly stronger, pointing to more robust leisure demand, Costar revealed it has not been able to offset losses throughout the rest of the week as average daily rate growth remains muted. Furthermore, Geopolitical tensions pose downside risks to international travel into the UK, most notably from the US, which has been a key feeder market, especially in cities such as London and Edinburgh. According to data from the US International Trade Administration, outbound travel from the US into the UK dropped by approximately 2% in March, which may be partly driven by the Easter holiday calendar shift. CoStar also stated that the introduction of Electronic Travel Authorisations (ETAs) to non-nationals, including European travellers, could have a negative short-term impact on demand from European countries, given the added costs, and as the UK is perceived as a more costly destination. CoStar said: “Although 2025 is expected to be slightly better than the prior year, some of the same themes might persist. Higher inflation and a more dampened labour market due to increased employer national insurance contributions, likely limiting pay growth and employment opportunities, may lead to a price-conscious consumer. This could limit ADR growth in certain hotel classes and destinations.”

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Q1 hotel performance dips amid late Easter and budget pressures

Weekday performance has been weakest, experiencing sharper year-over-year declines on Sundays through Thursdays

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