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Occupancy for UK hotels increased from 62.8% to 63.5% in January year-on-year, while London rates remained flat at 66.7%, according to data from RSM UK.
The figures, compiled by Hotstats, show the average daily rate for occupied rooms in the UK rose from £122.24 to £124.48, while the rate in London increased from £172.62 to £177.91.
RevPAR grew from £76.72 to £79.03 nationally. Gross operating profits remained stable at 18.8% for the UK and 23.9% in the capital.
Industry analysts suggest that while consumer demand held up during a seasonally slow month, ongoing tensions in the Middle East could impact future travel.
The sector remains exposed to volatility in oil and gas prices. Hotels have improved energy efficiency by approximately a third since the pandemic but remain energy intensive.
Likewise, rising utility costs may squeeze disposable income, potentially reducing experience-led spending and business travel if market volatility continues throughout the year.
Chris Tate, partner and head of hotels at RSM UK, said: “Consumer demand for hotels and travel managed to hold up in January during a seasonally slow month. However, the positive news is that despite having to shoulder significant cost increases last year, hoteliers have been able to manage these headwinds, with operating profits remaining in line with the previous year.
“As we enter Spring and the warmer weather makes an appearance, the hope is that demand will start to gain momentum. Hotels have already worked hard to absorb rising employment costs, but preparing for further external shocks will be essential.”
Thomas Pugh, chief economist at RSM UK, added: “The outlook for the hotel sector is now arguably less rosy. Hotels are still one of the most energy intensive service industries, even though the sector has improved energy efficiency by about a third compared to its pre-Covid average. That means hotels will be hit harder than other industries by rising energy costs.
“Of course, everything depends on how long energy prices stay high for. Consumers are more likely to smooth through a temporary price shock by reducing saving rates, which are currently high. If there is a swift resolution to the crisis, the hit to the sector and economy should be limited. But the risks are clearly to the downside and the hotel industry is more exposed than others.”
