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Hotel market

Growth despite uncertainty: Positive trends in the regional hotel sector

Author: Gemma





The UK hotel sector, like many parts of the economy, has faced its fair share of challenges and uncertainty over the past decade or so, from the 2008 financial crisis to the recent (and ongoing) questions around Brexit.

Despite these external influences, the industry has shown consistently positive performance and growth – an encouraging sign for investors.

In a report reviewing recent trends and looking ahead to what 2019 could bring, PwC said the defining theme for the UK hotel market at the moment is “growing through uncertain times”.

The regional picture

Hotels all over the UK have “prospered” in recent times, with positive trends fuelled by increasing demand for business and leisure travel, according to PwC.

The number of people choosing to visit the UK for leisure purposes has been driven up by the relative weakness of the pound over the last few years, a trend that is likely to continue in 2019.

Occupancy rates have now reached a record high of 76 per cent outside London, and PwC predicted that the figure will remain consistent over the coming year. In 2009, by comparison, occupancy rates stood at 69 per cent.

Average daily rates (ADR) – the typical rental income received per occupied room – are slowly creeping up, from 71 per cent in 2017 to a forecast 72 per cent in 2018 and 73 per cent this year. These figures represent year-on-year growth of 1.3 per cent and 1.2 per cent in 2018 and 2019 respectively.

The continuation of positive trends in occupancy and ADR are expected despite a projected increase in the supply of rooms in 2019, giving customers more choice and hoteliers more competition.

PwC forecast 21,760 new rooms coming onto the regional hotel market this year – an annual net supply increase of 3.3 per cent.

Aerial View Of New Liverpool Cityscape Landmarks in England UK

Liverpool shines

Looking at specific regional hotel markets across the UK, the report noted that a number of cities benefited from the same record volumes of inbound tourism and strong corporate demand that boosted the London hotel sector in 2017.

The figures showed that some locations “continue to outshine” their counterparts.

One destination singled out by PwC was Liverpool, where occupancy and ADR gains drove an 8.1 per cent increase in revenue per available room during the first half of 2018. Hotel suite investment is needed to meet the demand from tourism in the city.

The north-western city offers a lot to attract corporate and leisure travellers alike. Its thriving economy and the innovation taking place in areas such as the Knowledge Quarter will appeal to those seeking out new business opportunities, while tourists come to explore Liverpool’s famous cultural history and visit attractions like the Merseyside Maritime Museum.

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