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< Back to news 02 March, 2015

UK hotel performance set to grow and grow

The Caterer this week shares insight into the UK's hotel performance trends...

The performance of UK hotels is set to continue on an upward trajectory throughout this year and into 2016, according to a new forecast from accountancy group PWC.

Following a buoyant 2014, the momentum of growth is set to continue with revenue per available room (revpar) growth for London of 4.6% to £122 in 2015 and 4.7% to £127 in 2016.

Meanwhile, growth in the provinces is expected to be at a slower pace than in 2014, with gains of 5.4% to £51 and 5.1% to £53 respectively for this year and next.

PWC is publishing its UK hotels forecast update at the International Hotel Investment Forum, which opens today in Berlin.

The projected occupancy of 76% (up 0.9%) for the regions is a record high, while the forecast occupancy in London of 1.6% is the highest for almost 20 years.

Key drivers for ongoing growth are the improvements in the global and UK economy, increasing inbound tourism and this year’s Rugby World Cup.

While the extent of hotel supply has the potential to slow growth in some locations, PWC suggests it will not be enough to put the brakes on overall business patterns.

The 10 UK cities with the most active pipeline of rooms is London, Manchester, Edinburgh, Birmingham, Aberdeen, Glasgow, Newcastle, Liverpool, Cambridge and Bath. An additional 6,430 rooms could open in London this year, taking supply to nearly 136,000. The regions are forecast to see a further 9,420 rooms open, increasing supply to 467,700 rooms.

However, the potential fly in the ointment could be the fall in oil prices, which while being positive for British travellers, who will have more money to spend on holidays, could slow down business from Russia and the Middle East. Further uncertainty may arise from the outcome of the general election in May, unstable events in Greece and Ukraine, and the strength of the pound, which will encourage UK residents to travel abroad.

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