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Some 7,000 hotel rooms will open in London this year – more than double that of last year – despite a decline in occupancy over the last four quarters.
That’s according to the Hotel Bulletin Q4 2015 from AlixPartners, AM:PM and HVS, which said the number of room openings in London is expected to account for nearly half of all new room openings across the UK which is expected to reach 16,000 by the year-end.
This is compared with the 10,000 new bedrooms that were opened across the UK last year.
Revenue per available room (RevPAR) across 12 cities in the UK grew by 2%, this was significantly lower than the 19% average growth recorded in the fourth quarter of 2014. Occupancy in the same period fell in eight of the 12 cities.
In the fourth quarter London’s occupancy fell by 2%, compared with the same period in 2014, despite hosting Rugby World Cup matches throughout October which is believed to have boosted the UK economy by £1bn.
The period’s figures were affected by a poor December performance where London recorded a 9% year-on-year fall in RevPAR.
The report said this was largely a result of some Christmas shoppers staying away from the city in December, where footfall decreased by 5%, partially due to concerns following the Paris attacks in November.
Graeme Smith, managing director at AlixPartners, said: “The UK market has enjoyed a sustained period of RevPAR growth throughout 2015, albeit at a significantly lower rate than the previous year.
“Flat and declining occupancy is historically followed by weaker room rate performance. If this continues it may signal that we are approaching the top of the market.”
The report concluded: “Flat or declining occupancy is historically followed by plateauing rates, indicating that a peak in hotel trading may nearly have been reached.”
