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London hotel occupancy fell in March as the conflict in the Middle East began to impact international travel.
Data from the RSM UK Hotel Tracker revealed that occupancy in the capital declined from 76.3% to 74.8% year-on-year.
The figures, compiled by Hotstats and analysed by RSM UK, indicated a divergence between the capital and the wider country.
While London saw a decline, UK-wide occupancy rose slightly from 73.2% to 73.6% over the same period.
Average daily rates in London increased by 5% to £190.24, while national rates rose 3% to £136.78.
Despite higher room prices, gross operating profits fell in both markets. London margins decreased from 33.6% to 32.6%, and UK margins dropped from 30.1% to 29.5%.
Thomas Pugh, chief economist at RSM UK, suggested that a squeeze on disposable incomes could impact future bookings as inflation is projected to peak at approximately 4% later this year.
Chris Tate, head of hotels at RSM UK, said: “The immediate impact of the Middle East conflict has started filtering through to the hotel industry, with London occupancy taking a hit.
“Ongoing travel disruptions will have inevitably put a stop to some international tourists’ plans, while business trips may have also been put on hold. The above inflation increase in room rates will have offered some reprieve to hoteliers and cushioned the blow to occupancy levels, but that didn’t reach the bottom line due to increased employment costs.”
Tate added: “Growing concerns around jet fuel shortages could result in fewer inbound tourists to the UK and less business travel, but domestic travellers opting for a UK staycation instead may partly offset this.
“However, there will be more headwinds for the industry to navigate, as higher wages, rising energy and business rates bills, and lower consumer sentiment feed through in the coming months.”
