Economic uncertainty, weak business travel demand and an influx of new capacity is projected to flatten trading by UK hotels next year.
The pre-Brexit caution forms part of the findings of PwC’s hotels forecast for 2019.
The analysis found that the outlook for London has levelled out with year-on-year occupancy growth of just 0.1% and a marginal fall of 0.5% forecast for 2019 – with see occupancy levels dropping one percentage point to 81%.
The average daily rate (ADR) is forecast to see a marginal uplift over the next year with 0.2% growth for 2018 taking ADR up £1 to £149 and 0.8% for 2019 taking the average rate up another £1 to £150.
But revenue per available room (revpar) growth will remain static with 0.3% forecast for both 2018 and 2019, a big contrast to the 4.6% growth seen in 2017.
Overall revpar is expected to remain static at £122 for 2018 and 2019.
However, a potential 5,000 new rooms could open in London this year, with a further 4,300 in 2019. This is on top of the 38,000 rooms added in the previous five years, according to research from the global hotels data company STR,
PwC head of hospitality and leisure research, Liz Hall, said: “2017 was a hard act to follow for hotel trading, in terms of growth and 2018 has been held back by uncertainty, slower economic growth, significant supply additions and reported stuttering business travel.
“This is despite the weak pound buoying leisure travel, the Royal Wedding and the International Farnborough Air Show effect.
“However, trading in absolute terms remains extremely high by historic and global standards for London and by 2019 we forecast both ADR and revpar to reach new records in nominal terms.”
She added: “For a sector heavily reliant on people to deliver its products and services, the shortfall in availability of EU nationals remains a concern for hotels and the weak pound has pushed up the costs of retaining staff and importing goods within the sector.
“Following a number of years of strong revenue growth when there was not the imperative to focus on costs, prudent operators and owners need to adopt a stringent approach to operating costs growth in 2019 to preserve profitability.”
Looking at the UK regions, Hall said: “Our forecast shows revpar in the regions to end 2019 23% ahead of pre-recession peaks in nominal terms but lagging in real terms by 7%.
“Demand continues to be driven by inbound tourism, domestic holidays and events.
“The ICC Cricket World Cup is being held across 11 locations in England and Wales which could help regional hotels in 2019.
“Occupancy rates have been creeping up from 66% in 2009 to an average of 76% in 2015.
“We forecast rates to remain at this level despite over 40,000 rooms to be added in the regions in 2018 and 2019.
“A continuing structural supply shift towards a greater proportion of budget rooms will sustain occupancy levels.”
This is a community-moderated forum.
All post are the individual views of the respective commenter and are not the expressed views of Travel Weekly.
By posting your comments you agree to accept our Terms & Conditions.