A greater than anticipated boost in tourism has made it a strong year for hotels across the UK, according to Knight Frank’s first annual review of trading performance in the UK hotel sector.

The review, produced in partnership with HotStats, reveals that RevPAR (revenue per available room) is forecast to grow by more than 7 per cent in 2017, driven by 7 per cent growth of average daily rate in London and record high occupancy rates in the rest of the UK.

Both London and regional UK markets have recorded growth in occupancy, of 1.6 per cent and 1.8 per cent respectively for the year to date in August. London has outperformed provincial markets, with a 9.1 per cent growth in RevPAR achieved through a strong uplift in the average room rate to £161.

London has also benefitted from the weak pound, which has encouraged overseas visitors to the capital city, with strong growth recorded for long-haul markets, particularly from North America, who typically stay longer and spend more.

The volume of demand from international visitors in London, combined with strong leisure demand drivers in the rest of the UK, is driving hotel occupancy rates throughout the UK. Knight Frank is forecasting 2017 year-end occupancy rates of 82 per cent for London and a record high of 77 per cent occupancy for the rest of the UK.

Hotel analyst Philippa Goldstein said, “Despite a slowdown in the UK economy and ongoing uncertainty following the Brexit vote, hotels have enjoyed a particularly robust trading environment, in both London and regional UK, albeit with variation in performance amongst regional markets.

“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.”

So far this year 10,000 new hotel rooms have opened in the UK, with a further 7,000 new rooms planned to open throughout the UK in the final quarter.

(source: Knight Frank)