The weaker pound means London's hotel boom will continue into 2018, a new report says

Alys Key
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The Goring Hotel, where the fiancee of B
London hotels are booming with help from the weaker pound (Source: Getty)

London's hotels are set to remain resilient next year despite challenges to the UK's hospitality market, according to a report released today.

The weaker pound will continue to drive growth in bookings and revenues across the capital and the UK as a whole, according to PwC's latest Hotels Forecast.

But a supply spike in London means growth will be slower than the industry has experienced so far this year, with 7,000 new rooms expected to be added in the city next year.

Revenue per available room (RevPAR), the hotel industry's measure of profitability, is expected to grow six per cent in London this year to £120. Growth is set to slow to 2.4 per cent in 2018, but RevPAR is still set to hit £123.

Occupancy will also continue to grow, climbing a predicted 0.2 per cent in 2018. This follows a spike of 2.3 per cent this year in London, compared to average growth of 0.2 per cent elsewhere in the UK.

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Unlike some other cities which have fallen victim to terror attacks in recent years, London's hotel bookings have held up. Record numbers of tourists have flocked to the UK so far this year, a phenomenon which PwC links to the weak pound.

The news comes amid a slew of positive reports from hotel chains which say they saw a bounce in London revenues this year. Both Park Plaza owner PPHE and Dalata said this month that their London sites have outperformed, while Hilton unveiled plans for more than 30 more British hotels.

But Liz Hall, head of hospitality and leisure research at PwC warned that the cost pressures on hotels could lead to a reduction of hotel supply next year, constricting growth.

"While the pound is bringing leisure tourists in, it is also creating a harsher environment for hoteliers as they have to contend with rising costs and squeezed margins with the weak pound pushing up the cost of imported goods," she said.

“There are also labour issues. The Brexit vote has prompted some workers from EU countries to leave their jobs and some hotels are struggling to fill these vacancies and facing higher costs when they do so.”

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