Register to get 3 free articles
Register to unlock the article and receive our free newsletter. Join 26,000 other hotel leaders and stay in the know.
Want unlimited access? View Plans
Already have an account? Sign in
London has been named the most attractive European city for hotel investment in the coming year, according to the 2023 European Hotel Industry Survey by Deloitte.
The report, which surveys senior hospitality leaders, owners, lenders, developers and investors, found that London has risen two places since last year, with Lisbon retaining second place and Amsterdam falling to third.
The majority of respondents said they expect to see London’s RevPAR grow in 2024. More than half (54%) expect the capital’s RevPAR to grow between 4% to 7%, up from 41% of respondents last year, while 72% anticipate a RevPar growth of between 1% to 5% in the UK regions this year (up from 53%).
Hotel executives also showed improved optimism in their expectations for London’s Gross Operating Profit per Available Room (GOPPAR) in 2024 compared to the last two years. Some 58% expect London’s GOPPAR to grow by 1% to 5%, up from 38% last year.
Despite this, the pressures of high inflation, labour shortages and greater energy prices meant that 28% of respondents expect 0% or negative GOPPAR growth in London in 2024.
Andreas Scriven, head of hospitality and leisure at Deloitte UK, said: “It is reassuring to see London climb back up the rankings, and it is perhaps not surprising to see new hotels opening given the UK’s capital’s centre for tourism and business, as well has being a gateway city for international travel.
“For London to continue to remain attractive to hotel investors, the industry will need to address concerns around the ability to drive pricing in light of inflationary pressures.”
Elsewhere, the survey found that the proportion of respondents that believe profitability will improve in the next five years has nearly doubled, rising from 38% in 2022 to 64% in 2023.
In addition, nearly three-quarters of respondents (73%) said they are optimistic about the long-term future of the UK hotel market, up from 66% last year.
It also found divestitures (24%) and acquisitions (58%) both increased as key priorities for business leaders in the year ahead, rising by 18% and 16%, respectively year-on-year.
However, respondents cited rising costs (89%), higher interest rates (87%), a shortage of skilled labour (85%) and increased staff costs (81%) as key concerns that could hinder growth in the year ahead.
Meanwhile, demand fluctuations (48%), the inability to raise prices (45%), Generative AI (41%) and technology disruptions (39%) were all perceived as medium-term risks.
Scriven concluded: “Concerningly, the current macroeconomic climate is forcing leaders to think about short-term solutions to stay in the black. To remain competitive, hospitality executives need to think about the parts of their business that can benefit from implementing the latest technologies, which will in turn benefit the bottom line.”
