Sunday, February 16, 2025
Sunday, February 16, 2025
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Better than expected room rates for UK Hotels

Occupancy and room rates of UK hotels held up better than expected in November according to the RSM Hotels Tracker.

Data compiled and produced by Hotstats and analysed by RSM UK, shows UK hotel occupancy was down from 79.2% in October to 76.8% in November and, although occupancy is yet to reach pre-pandemic levels, it surpassed those seen last November in the UK (75.2%)

Average daily rates (ADR) of occupied rooms decreased from £150.70 (October) to £146.76 (November), ahead of the rates charged in November 2022, at £139.32.

Revenue per available room (REVPAR) declined from £119.25 (October) to £112.77 (November), however, REVPAR was up 7.7% on the same period in 2022, exceeding current inflation rates. Gross operating profits fell slightly at 37.1% (October) to 35.2% (November).

Chris Tate, head of hotels and accommodation at RSM UK, said, “The hotel sector performed relatively well in November, with room rates and occupancy holding up better than expected for this time of year and particularly considering the continued squeeze on household budgets.

“This was helped by early festive celebrations and companies holding Christmas parties which provided a welcome boost to food and drink revenues. We expect this to be evident in the December results too.

“A number of economic indicators showed positive signs of improvement during the month, including an uptick in retail sales figures and the easing of inflation. Uncertainty remains but things are heading in the right direction, as consumer confidence gains traction. However, while labour costs continued flatlining in November, the real pain will come in April when the rise in national minimum wage kicks in and hoteliers need to factor in this steep increase in costs.”

Thomas Pugh, economist at RSM UK,  “Amid the cost of living crisis and the recent period of economic malaise, consumers have generally continued to prioritise spending on experiences, such as hotels and restaurants over spending on retail goods. Indeed, output in the accommodation and food services sector is about 2% above its 2019 level, while retail activity is about 2% below it.

“This strength in spending on hotels appears to have continued in November with hotel occupancy remaining relatively resilient.

“Looking ahead, the first six months of this year are likely to remain tough with high interest rates dragging on economic growth and inflation remaining well above target.

“However, things look brighter in the second half of this year. The inflation rate will probably fall to around the 2.5% range, which will allow the Bank of England to start cutting interest rates. At the same time real earnings growth will continue to rise and there is the distinct possibility of further tax cuts coming in March. All this would mean more consumer spending, which will be a positive for the hotel and travel sector.”

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