According to the Hotel Bulletin: Q2 2016, published by HVS, AlixPartners and AM:PM, hotel occupancy in London experienced its sixth consecutive quarter of year-on-year decline with Brexit poised to subdue the sector further.
The report noted that London hotel occupancy, like many other major European cities, continues to feel the effects of increased global terrorist activity. As well, London has seen a decline in the number of US tourists travelling because of the presidential election.
As a result, London has seen a 2% decline in its RevPAR compared with Q2 2015 and average room rates failing to increase for the second consecutive quarter.
Russell Kett, chairman of HVS, observed, “Whilst this is significant in the short term, London is, and will remain, a huge magnet for inbound tourism so the longer term future of the capital’s hotel sector is still positive, even when taking account the new hotels in the pipeline and the potential impact of the Brexit implementation causing economic wobbles.”
Results, however, were more varied across the UK, although with overall demand sluggish average RevPAR growth only reached 2%.
Performance of hotels across the 12 UK cities reviewed varied significantly in Q2. Birmingham was top with RevPAR growth of 16%, while hotels in the Roman city of Bath saw RevPAR up 11% year-on-year on the back of a boost in international tourists.
In contrast Newcastle recorded another quarter of RevPAR decline, down 4%, as the combined effects of a 10% increase in hotel supply over the past 12 months and strong comparators last year came into play. Aberdeen saw RevPAR decline 24% year-on-year as hotel occupancy continues to suffer from the city’s exposure to the oil and gas industry. If predictions that oil prices will continue to fall are correct, this will further suppress demand for the city’s hotels.
Said Kett, “Performance has always been very location-driven with localized supply and demand issues having an impact on hotels’ operating performance. UK-wide averages tend to hide these fluctuations and even the performance within an individual city can vary quite markedly from hotel to hotel.”
To review the full report, go to http://www.hvs.com/article/7759/hotel-bulletin-q2-2016/?campaign=email.