Economic growth to boost UK hotel sector

Occupancy is expected to grow by 0.4 per cent in London and 0.9% in the regions this year, pushing national occupancy by 0.8 per cent to around 75.7 per cent, the forecast revealed.

The report, called ‘High hopes for a record-breaking year’, also predicted a 2.7 per cent increase in average daily rates (3.4 per cent in London; 2 per cent in the provinces), to reach £85.1. As a result, revenue per available room is forecast to reach an all-time high in London at £117 (up 3.8 per cent).

Even more optimistic​

Speaking at Hotelympia, Liz Hall, hospitality and leisure head of research at PwC, explained: “Occupancy was up 2 per cent in London in the first three months of 2014, and we are now even more optimistic than at the time we wrote the report. Hotel revenue is tightly linked to GDP growth, which we forecast at 2.6 per cent for 2014. International travel to the UK has seen positive increases, and business travel is also expected to pick up.”

The UK recorded 33 million inbound travellers in February 2014, on par with the March 2007 figure - a great sign of global and national economic recovery. However, the continuous appreciation of the pound sterling could become an issue.

In the domestic market, wages are not increasing faster than inflation, the report said, but Hall warned that it would take some time for the lower middle class to feel financially stable again.

There is hope that the ‘super summer’ announced by weather forecasters will encourage Brits to spend their holidays in the country, but that is difficult to predict, she added.

Supply growth is expected to pick up again in 2014 (5 per cent), and even more in 2015, with over 12,000 new rooms. However Hall added that the increase is very much polarised, with the majority of rooms either in budget or in 4-star hotels. “There won’t be much in the middle,” she said.

The forecast is even brighter for 2015, with 76 per cent national occupancy (up 0.3 per cent from 2014), £88.9 average daily rate (up 4.5%) and  £67.6 revenue per available room (up 4.5 per cent).