Knight Frank’s annual review with HotStats shows that RevPAR (revenue per available room) is forecast to grow by more than 7% this year, driven by 7% growth of average daily rate in London, and record high occupancy rates in the rest of the UK.
London has 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% for London and a record high of 77% occupancy for the rest of the UK.
Hotel analyst Philippa Goldstein said, '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.”
(source: Knight Frank)