The UK hotel market delivered strong revenue growth in 2023, with profits now exceeding pre-pandemic levels across most markets, according to the latest UK Hotel Trading Performance Review 2023 published by Knight Frank in partnership with HotStats.
Despite the challenging macro-economic environment, the sector posted a strong trading performance this year, with London’s 12-month occupancy increasing by 16 percentage points to 77% – ahead of the UK’s regional occupancy performance for the first time since the post-pandemic recovery began and in line with historical trends.
London’s average daily rate (ADR) rose by 8% in the past 12 months and is up 22% on 2019. The key driver for the capital’s strong performance is the return of overseas visitors supported by strong growth in corporate and meetings and events business, as well as continued robust leisure demand.
The regional market was also buoyant throughout 2023, with Knight Frank forecasting full-year occupancy to be above 74% and ADR expected to rise to £103 – the first time in history it will exceed £100. Full-year 2023 occupancy will continue to lag 2019 levels by just 2.6 percentage points, but there will continue to be strong ADR growth – up by 26% versus 2019.
Karen Callahan, partner and head of hotel valuations at Knight Frank, said: “Fundamentals of the UK hotel sector remain strong, despite its challenges and 2024 is set for another exciting year of growth and opportunity. The sector has proven repeatedly its ability to weather turbulence and the strong trading performance is serving to counter the increase in yields in a high-interest rate environment, with hotel values holding up strongly and performing well compared to other sectors.
“The pound staying low, improving flight schedules, and a more stable economic outlook will all serve to boost international demand. Following a slow start to 2023, Q1-2024 presents a real opportunity to drive growth and we remain optimistic that the UK hotel sector is well placed to deliver another year of resilient growth.”
