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The outlook for hotel trading in the UK this year remains flat as a surge in room supply, slowing global and UK economic growth and ongoing uncertainty relating to Brexit is expected to provide a “challenging environment for performance growth”, PWC has said.
PwC’s latest UK Hotels Forecast Update shows that London should still boast high occupancy levels but as high room supply levels impact, occupancy growth this year will be marginal at 0.3%.
Average Daily Rate (ADR) is forecast to continue to see growth with an uplift of 1.4% in London for the next two years, taking ADR up £2 to £151 in 2019 and £153 in 2020. Gains in ADR will drive revenue per available room (RevPAR) growth by 1.7% in 2019, taking RevPAR to £126. In 2020, growth is anticipated to see a further 1.4% rise, taking RevPAR to £128.
David Trunkfield, head of hospitality and leisure at PwC, said: “London saw stronger than expected demand in the last three months of 2018 which transformed the year for the capital. Early signs in 2019 are that January has continued to see some good growth, with record occupancy levels and ADR gains driving RevPAR growth to over 5%.
“Weekend demand remains strong and the weak pound continues to support tourism and hotels, however there are worries that tourists, especially from the EU, may adapt a “wait and see” attitude towards visiting the UK in 2019.”
He added: “While new supply grew by 2% in 2018 it is forecast to increase by a further 4% in London this year and with uncertain demand, weaker corporate travel trends and no blockbuster events scheduled this year, this could dampen hotel performance.”
