Published on : Saturday, October 7, 2017
Simply put, in the United Kingdom’s hospitality industry, demand for lodging has outstripped supply. In the entire country, the top ten hotel brands operate about 205,000 rooms, 54% of which are considered budget properties. With this in mind, hotel managers have worked to boost revenue throughout the industry by focusing on increasing it per available room in all markets.
This has been widely successful, and as a result, the hotel industry in the United Kingdom has experienced steady growth since 2016. Even areas that have previously shown slow gains — areas such as Newcastle and London — are showing increased revenue per available room.
In the first quarter of 2016, most regions throughout the island showed occupancy growth. The Belfast area saw the biggest uptick, with a 13% rise, while the largest city in the country, London, saw only modest growth with occupancy going up 5%, driven primarily by visitors from China and the United States. Liverpool underwent a similar increase as London, while some other markets like Manchester and Leeds grew much slower with only 2% increase. The Scottish city of Edinburg was the slowest, coming in slightly below Manchester and Leeds.
The country’s ongoing increase in demand, coupled with a limited increase in supply, means that average room rates percentage changes were in general positive throughout the twelve cities that were surveyed, except for New Castle and Aberdeen. As a result, revenue per available room, also known as RevPAR, went up, with Belfast seeing the biggest rise at a whopping 25%, while London was next with 11% and Liverpool third with 10%.
An interesting subplot that defines a good deal of business in London is that investments from China are being made in the real estate market. In the first half of 2017, about five million pounds were put into the British capital. The pound has been low in the wake of the Brexit vote, and as such the country has become an attractive place for investments. It’s uncertain what sort of long-term impact this will have on the hospitality industry, but based on results so far, indications show that revenue is likely to continue growing. If supply surpasses demand, however, this will most certainly change.