In partnership with HotStats, Knight Frank have produced a unique and comprehensive analysis of the UK’s hotels trading performance, which focuses on a detailed review of hotel revenue, cost, and profitability using consolidated monthly data, to analyse historical and year-to-date performance.
We have used a range of datasets, ranging from hotel class, hotel size and location from which an in depth analysis has been carried out and key hotel metrics applied in order to review trends, draw conclusions and provide an insight into future hotel trading performance.
Our sample of hotels, totalling some 112,000 rooms, is geographically spread across England, Scotland and Wales. London comprises the greatest concentration of hotels in our sample (37%), representing approximately a quarter of London’s hotel bedroom supply. In addition, our sample focuses predominantly on the branded midscale and upscale hotel sectors and represents approximately 30% of the branded UK hotel market.
Despite a slowdown in the UK economy and ongoing uncertainty following the Brexit vote, headline results have shown that for August YTD 2017, hotels have enjoyed a particularly robust trading
environment, in both London and Regional UK, albeit with variation in performance amongst regional markets. The strong RevPAR growth in London, largely driven by growth in the average room rate, combined with healthy levels of trading in Regional UK has filtered down to GOP, resulting in respectable growth in GOPPAR (10.1% and 4.8% respectively as at August YTD 2017). Nevertheless, the headwinds of rising costs in both expenses and payroll highlight the challenges ahead for the industry, at a time of heightened concern over the free movement of labour post Brexit.
Looking ahead to 2018, there is a growing market sentiment that the rate of growth in key trading performance indicators will be lower than in 2017. Nevertheless, the weakened pound is expected to continue to attract overseas leisure visitors, which combined with strong growth in demand from continental Europe and resilience in the domestic “staycation” market, should provide further growth potential for the UK hotel market. We anticipate that growth in RevPAR and GOPPAR will continue into 2018, albeit with a tougher trading environment, complicated further by the volume of new capacity entering the market.
