Increased polarisation in hotel performance between London and the regions

29-10-2019

The performance of UK hotels became increasingly polarised during the third quarter of the year, with strong revenue per available room (revpar) growth in London and a revpar decline in the regions.

The capital enjoyed a revpar increase of 5.1% to £145.97, while regional revpar performance declined for a third consecutive quarter, down 1.3% to £63.42, according to the UK Hotel Market Tracker: Q3 2019. Average room rates closely mirrored revpar figures, up by 5.3% to £165.69 in London and down by 0.9% to £77.08 outside London.

Events such as Wimbledon and a historically-low sterling in August helped fuel the growth in London rates, while the pressure on profitability in the regions made the 5% active pipeline as percentage of supply to be particularly concerning.

Occupancy levels dropped by 0.3% in both London and the regions to 88.1% and 82.3% respectively.

Meanwhile, hotel transactions also experienced an increased differential between London and the rest of the country, with a 37% decrease in hotel sales to £2.1b in the regions and a 31% increase in the capital to £1.b. The regional decline was said to be due to the ongoing Brexit uncertainty, while London continued to be a perennially attractive proposition for investors.

The most significant UK transaction between July and September was that of the 518-bedroom Sofitel Gatwick to Schroders for £150m, a figure equivalent to £290,000 per room.

The UK Hotel Market Tracker: Q3 2019 is produced by AlixPartners, HVS and STR.

Source: The Caterer.