Sporting fixtures bring 6% boost to London’s hotels while provinces feel the squeeze

On the back of both major sporting fixtures, London’s hotels have witnessed an average room rate rise. Revenue per available room (RevPAR) in London’s hotels rose 6% in Q2 2019 with visitors travelling to the capital to watch the ICC Cricket World Cup and the Major League Baseball, according to the latest UK Hotel Market Tracker by HVS London, AlixPartners and STR.

The city’s hotels saw average room rate rise 5.6% to GBP 156.89 (USD 194.25) year-on-year, with occupancy up 0.6% to 84%.

However, it was a different story in the regions outside of London. Despite a number of the cricket fixtures being held in Birmingham, Manchester and Southampton, outside the capital, RevPAR was down by 0.9% for the quarter. Average room rate fell 0.6% to GBP 73 (USD 90.38) compared with the previous year, and occupancy was down 0.3%, This was the second consecutive quarter that RevPAR has decreased in hotels outside London.

“Unfortunately, these fixtures were not enough to boost occupancy sufficiently in hotels outside London. The combination of top line retraction, cost pressures and continuing new supply is still putting significant pressure on regional hotel margins,” commented Russell Kett, chairman of HVS.

“The transaction market is still suppressed.”

The pipeline for new hotels in London currently stands at 10% as a percentage of supply, with a 6% active pipeline for the regions.

“With revenue declining, costs increasing and a strong active pipeline operators are likely to struggle to increase profitability, particularly in locations outside the main tourist hubs, and those not benefitting from robust corporate activity,” he added.

“The transaction market is still somewhat suppressed due to Brexit-related deal reticence, with transactions either being put on hold or with some taking longer to complete. Once Brexit is completed in October, we should see more UK transactions being completed as some of the uncertainty is removed and confidence begins to be restored,” he added.