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Hotels in the UK are continuing to recover, boosted by domestic leisure demand and supported by the return of business travel and flexible working trends.
According to the latest UK Hotel Trading Performance Review 2022 by Knight Frank and HotStats, UK hotel occupancy has improved significantly in 2022, with London rebounding from the pandemic.
Occupancy rates in the capital recorded a 70% increase from the seven-month period to the end of October 2022.
With strong demand across multiple segments, despite international visitor arrivals remaining lower than pre-pandemic, the ability to drive rates within a high inflationary environment has resulted in the average daily rate surging ahead by 22% when compared to 2019 prices, and by 2.8% in real terms.
The regional UK hotel market now exceeds its revenue per available room performance by 3.5% and London by 2.4%.
The report also identified the top 12 performing regional cities, with the top five cities ranked by their total revenue per available room recovery being Brighton, Leeds, Liverpool, Glasgow and Bristol. The top 12 regional UK cities have shown a robust recovery during the past seven months, achieving a RevPAR penetration of 122% versus the wider regional UK market.
At the same time, golf and spa hotels have outperformed the market, achieving a RevPAR penetration of 158% over the same period.
Looking ahead, Glasgow, Brighton, Manchester, Liverpool and Birmingham are the leading regional UK cities in terms of future hotel supply. Of these, Glasgow and Manchester are set to record the highest annual supply growth of 5% and 4.7% respectively between 2022 and 2025, compared to a national average of 1.4% growth forecast.
Despite the significant adverse impact of the pandemic on the UK hotel sector, the pipeline of new hotel openings has remained buoyant.
Over 30,000 new rooms have opened in the UK since the start of 2020, with regional UK accounting for 70% of this new supply. Over the next three years, London’s supply is set to grow by 2% per annum, with some 10,000 rooms either under construction or with a proposed date of opening, equivalent to 8% of the existing hotel supply.
“Looking ahead to 2023, city centre hotel markets will need to recover more of the transient, midweek demand to achieve higher occupancy levels," Knight Frank Senior Analyst, Hotels & Leisure, Philippa Goldstein said. "Critical to the continued wellbeing of the sector is having a balanced segmentation mix, generating year-round hotel demand.”
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