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Hotel Market Exceeds Expectations But The Pace Of Recovery is Set to Slow

The UK hotel market has continued to recover, according to the latest UK Hotel Trading Performance Review 2022 by Knight Frank, in partnership with HotStats.

Domestic leisure demand fuelled the early recovery, but this has been supported by robust demand for business travel as well as flexible working trends generating new sources of demand. This comes despite the challenging market conditions, including accelerating costs, which are causing profit margins to decline.

Knight Frank says that the trading performance of the UK hotel sector has improved significantly in 2022, with London showing a remarkable rebound from the pandemic over the past seven months. Occupancy rates in the capital have reached 70% for the seven-month period to the end of October 2022.

Fuelled by strong demand across multiple segments, despite international visitor arrivals remaining lower than before the pandemic, the ability to drive rates within a high inflationary environment has resulted in the ADR (average daily rate) surging ahead by 22% compared to 2019 prices, and by 2.8% in real terms.

The Regional UK hotel has seen its RevPAR (revenue per average room) increase by 3.5% and by 2.4% in London. The report also identifies the Top 12 performing regional cities, with the top five cities ranked by their TRevPAR (total revenue per average room) recovery, named as 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.

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