Monday 1 February 2016 3:30 am

Hotel occupancy up but London loses out as tourists look beyond the capital

Tourists are giving London the cold shoulder and choosing to stay outside the capital city, driving profits up in the UK’s hospitality sector.

The average profit margin of UK hotels rose from 3.5 per cent in 2013/2014 to 4.5 per cent in 2014/2015 according to a new report by finance provider LDF.

And for the first time ever, international tourists are now more likely to travel outside London, pushing occupancy levels to an expected 77 per cent in non-London hotels, an all-time high. When occupancy levels rise above 72 per cent, hotels can start raising their prices due to a shortage of space.

More than 18.5m tourists stayed in hotels outside London in the year to June 2015, up from 17.9m the previous year, and 16.5m in 2010/2011. This has contributed to a total annual turnover of approximately £15.9bn in each of the last two years.

However, Londoners don’t need to worry about a lack of tourists just yet. The latest data from Visit Britain proves that London is still in high demand, welcoming 17.4m tourists in 2014, an increase of 3.53 per cent year-on-year.

“Whilst London continues to be a hotspot for tourists, travelling beyond the capital is increasingly popular with international visitors and this is helping to drive up overall income within the sector,” says Peter Alderson, managing director of LDF.

Many towns and cities have ramped up their tourism marketing budgets to support increased activity designed to encourage more visitors.

Alderson added that competition from budget hotel chains and Airbnb means that smaller hotels across the country need to raise standards and increase investment in order to make the most of the occupancy boom.