Economy

UK hotel growth will continue into 2016, says PwC

The UK hotel sector is set to continue delivering “impressive” growth throughout 2015 and 2016, according to PwC

The firm has predicted that revenue per available room (RevPAR) in London will increase by 4.6% to £122 in 2015, driven by occupancy growth of 1.6% to 84% – the highest level in 20 years – and an average daily rate (ADR) gain of 3% to £144.

This is expected to continue throughout 2016 with a 4.7% growth in RevPAR. With occupancy already at 85%, this will be almost entirely driven by ADR growth of 4.4%, to £151.

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Occupancy in the regions is forecast to reach a record 76% in 2015, remaining stable in 2016, while ADR is expected to grow by 4.4% in 2015 and 4.6% in 2016. As a result, regional RevPAR should increase by 4.4% to £67 in 2015 and 4.6%, to £70, in 2016.

Supply growth is also expected to increase in 2015, estimated at around 4.5% in London and 2% in the regions, with London, Manchester, Edinburgh, Birmingham, Aberdeen, Glasgow, Newcastle, Liverpool, Cambridge and Bath having the most active room pipelines.

In London, an additional 6,430 rooms are slated for opening this year, taking London’s hotel rooms supply total to almost 136,000 rooms. A further 9,420 rooms could open this year in the regions, taking supply to around 467,700 rooms.

Liz Hall, head of hospitality and leisure research at PwC, said: “The hotel sector faces plenty of challenges and geopolitical uncertainties. But we are optimistic [about] its ability to compete, adapt and succeed; especially now economic fundamentals of rising prosperity and increased globalisation have re-asserted themselves following the financial crisis.

“With pressure on rates continuing, we expect hotels to continue to find innovative ways to reduce costs in order to maintain their margins and customer experience.”

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