Recovering occupancy rates and food and beverage sales are rapidly powering a recovery in the London hotel market, albeit slower than the industry had anticipated.
For the first time since prior to the pandemic, occupancy rates in London are now exceeding the rest of the UK, at 66.9 per cent, overtaking UK rates of 68.4 percent in May, according to fresh data compiled by Hotstats and analysed by RSM UK, which was shared with City A.M. this morning.
Revenue generated from the sale of food and beverage has not only recovered to pre-pandemic levels, but the gap in revenue generation between London (£50.31 per occupied room) and the rest of the UK – at £41.97 per occupied room – has widened.
‘The continued growth in hotel occupancy in London has seen it overtake the rest of the UK, suggesting the city is slowly getting its mojo back,” Chris Tate, head of hotels and accommodation at RSM UK, said this morning.
Discussing the sector performance with City A.M., Tate pointed out that “with China coming out of lockdown and international travel expected to be back in full force during the summer months, this should improve occupancy even further and close the gap between pre-pandemic and future rates.”
Average daily rates (ADR) of occupied rooms in UK hotels increased from £123.30 in April to £135.50 in May, surpassing pre-pandemic rates of £119.50 in 2019.
Revenue per available room jumped from £77.30 in April to £92.70 in May, while London saw an even bigger increase of £32.00 to £140.10 in May.
However, occupancy rates have recovered at a slower rate than anticipated.
This is partly due to lower international and business travel which is also impacting UK high streets.
According to RSM UK’s analysis of data from Datscha, footfall is 48 per cent lower than pre-pandemic levels, driven by London (down 68 per cent), Newcastle (down 67 per cent) and Glasgow (down 67 per cent).
Tate stressed that “the hotel sector is currently facing a number of headwinds in the form of inflationary pressures, the cost of living crisis and consumer confidence reaching another all-time low in May.”
“As a result, recovery will undoubtably feel like an uphill battle for hoteliers,” he added.
“However, rather than succumbing to the various economic pressures, many hotels are benefiting from the return of corporate hospitality and are becoming more inventive by exploiting other revenue streams such as food and beverage,” Tate concluded.