London hotel RevPAR (revenue per available room) is expected to reach record levels in 2014, according to new analysis from tax and advisory specialist PwC.
The new prediction follows on a volatile 2013 for London hoteliers, with weak pricing and tough comparisons with last year’s Olympics in Q3. Occupancy rates remain high at around 81 per cent, and should creep back up to 82 per cent in 2014, according to PwC.
In London, PwC is forecasting a 2.3 per cent fall in Average Daily Rate (ADR) in 2013 and anticipates modest ADR growth of 1.5 per cent next year taking rates to £138.19, only one pound below 2012’s record level.
PwC anticipate a 2.4 per cent gain in London RevPAR in 2014 to take it to £112.80, another record.
Liz Hall, Head of Hospitality and Leisure Research at PwC, and author of the PwC UK Hotels Forecast 2014, says: “A return to some kind of ‘normal’ in 2014 will be welcomed after 2013’s post-Olympic correction. London has struggled this year but stronger pricing in 2014 and record RevPAR are expected. It looks like Occupancy, ADR and RevPAR are heading in one direction, with the right kind growth to put London back on its upward trajectory.”
The forecast sees signs of stabilisation in the regions, with the best ADR growth in 2014 since 2008.
PwC expects ADR to reach almost £60 in 2014, still below the 2008 peak, even in nominal terms, but the best result since 2009. PwC expect 1.8 per cent RevPAR growth in the regions in 2014, the best result since 2008.
The conference and meeting market remains unsettled, with demand remaining polarised and price aware, with residential meetings under buyer scrutiny.
Hall says: “More supply and changes to corporate procurement policies and sustainability issues around travel and communications technology are still leaving their mark. Shorter lead times, shorter meetings (more day and half day events), and clients wanting more for less and in less time, are also trends.”
Robert Milburn, Head of Hotels at PwC, adds: “While it’s early days for an economic recovery, GDP growth is good news for hotel revenues. But it remains a difficult trading environment as costs increase, and more supply put margins under pressure.”
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