The UK hotel sector remains buoyant in 2019 according to the latest UK Hotel Trading Performance Review 2019 Knight Frank,despite continued challenging market conditions including accelerating costs and a decrease in profit margins.
Knight Frank’s annual report, in partnership with HotStats, analyses the revenue, cost and profitability of hotels in the UK from a sample of 117,000 rooms.
The report found that performance was particularly strong in London which saw RevPAR levels grow by 5.8% and GopPAR levels increase by 4.7%. The top regional cities also saw RevPAR levels grow by 3.7% for the 12-month period to September 2019.
London’s “robust” performance was attributed to increased demand for leisure, with occupancy levels one of the highest in Europe currently running at 81.4%, whilst the regional cities saw average occupancy levels of 77% for the 12 months to September 2019.
The report reveals the increasing polarisation between regional UK’s secondary cities and the top 15 performing cities, with the latter achieving an average occupancy of 81% for the 12-months to the end of September 2019. The cities of York, Reading and Brighton were named as the top three cities in terms of TRevPAR growth.
The cities of Edinburgh, Manchester and Glasgow “proved their resilience” with respectable TRevPAR growth, despite strong supply growth, benefitting from having a “strong mix” of year-round leisure and corporate drivers.
In addition Knight Frank identified the top 15 performing regional cities with the top five including Edinburgh, Oxford, Brighton, Cambridge and Manchester, which have been strengthened by the domestic staycation market and the trend towards millennials “prioritising spending on experiences rather than consumer goods”.
The report also highlighted that UK wide profitability has been impacted by operational costs which are currently rising at a faster rate than revenues, with staff costs having increased by 5.1% in London and 6.3% in the top 15 regional cities due to the rise in the National Living Wage over the past 12 months.
Karen Callahan, head of hotel valuation at Knight Frank, said: “The UK hotel sector continues to show a robust trading performance, driven by strong inbound tourism, the growth in staycations and more frequent, short-stay leisure trips, with London and some of the top regional cities demonstrating significant outperformance over the wider regional UK hotel market.