London hotels will have to attract more leisure guests as corporate uncertainty and tight travel budgets take their toll, a new study shows.

While security concerns continue, the weaker pound since the Brexit vote will make UK more affordable to tourists, according to PwC’s latest UK hotels forecast.

But the growth of home sharing sites such as Airbnb is having an impact on hotel profits and they are set to generate almost £30 billion by 2025.

Yet regional hotels have experienced a good year-to-date with overall revenue per available room (RevPAR) up 2.6% in the year to June and more growth expected in 2017 albeit at a slower pace.

Occupancy rates of 77% for the regions this year and in 2017 would be the highest on record.

The outlook for London remains cautious; with a year-on-year forecast for occupancy decline of 1.8% in 2016 and a further marginal decrease of 0.8% in 2017, taking occupancy down a percentage point to 80%.

Average daily rate growth is forecast to decline by 1.1% in 2016 but will see a minimal 0.4% gain in 2017, to £141 and £142 respectively.

This also drives RevPAR declines of 2.8% this year and a further 0.5% in 2017, taking RevPAR to £114.4 this year and £113.8 in 2017.

PwC head of hospitality and leisure research, Liz Hall, said: “Uncertainty is dangerous and lower confidence pre and post the EU referendum, as well as an economic slowdown, have impacted corporate budgets and travel, a vital segment for hotels. Hoteliers will need to make up for this by attracting more leisure travellers.

“But, a slow absorption of new rooms in London and some regional cities may put pressure on trading. Add to this mix, brisk growth in serviced apartments and Airbnb listings and it’s a case of weaker demand chasing more rooms.

“However, falling sterling may bring some short term benefits to leisure tourism to London and international destinations such as Edinburgh. It may also result in more staycations across the UK.”

The report points to more hoteliers experiencing the impact of peer-to-peer accommodation platforms on their bottom line and more are taking the threat from this segment seriously.

Hall projects that greater penetration of the peer-to-peer business travel segment and a push into the regions will drive further growth.

“Peer-to-peer accommodation is now one of the most established sharing economy sectors – we estimate that nearly £3 billion of commerce was generated across these platforms in the UK alone in 2015 and this could rise to nearly £30 billion by 2025,” she said.

“More disruption is expected and in London, key P2P name, Airbnb, recorded a 54% growth this year.”

Get the report here