UK hotels are enjoying a post-pandemic rebound in trade, according to the latest data from Knight Frank.
Hotels in London achieved an occupancy rate of 82% in June 2023 – a rise of 3.2 percentage points year-on-year – with hotels outside the capital reporting growth of four percentage points to almost 81% occupancy versus 2022.
Hotels in London and the UK regions reported average daily rate (ADR) growth of 23% during H1 2023 compared with the same period in 2019. Luxury hotels in the capital achieved ADR growth of 38% during the same period.
Profit margins are slightly above where they were in 2019 with London enjoying a gross operating profit per available room (GOPPAR) of 42% in H1 this year compared with the same period last year. In the regions, hotel operators recorded 16% GOPPAR growth over the same period.
Karen Callahan, head of hotel valuation and partner at Knight Frank, said: “London’s performance during the first half of the year has seen ADR growth continue to trend upwards and along with much improved occupancy levels, this strong occupational performance is supporting profit margins and GOPPAR growth. This is a welcome counterbalance to the softening of yields that has resulted from the increasing cost of debt, and with hotels acting as an inflation hedge, investor appetite for the sector remains strong.”
Philippa Goldstein, senior analyst, hotels and leisure at Knight Frank, added: “Given these trading results, it is not surprising that inflation levels, whilst on a downward trajectory, continue to be elevated by services and in particular hotels and travel spend. Whilst the second half of 2023 will see ADR growth more stimulated by demand than inflationary pressures, the pace of ADR growth is likely to remain strong over the next quarter.
“RevPAR [rooms revenue per available room] growth will be further underpinned from strengthening occupancy performance. London is set to benefit from the continued uplift in overseas arrivals, whilst revenue growth for the regions will come from a well-balanced mix of demand drivers and the focus on channelling a high-yielding segmentation mix.”
