The mood in this edition of our forecast is a positive one; but as always there are uncertainties looming on the horizon.
London hoteliers saw a record 2014 but so far 2015 hasn’t replicated this stellar performance, according to new PwC analysis. While average performance metrics are still very high by most global city standards, the pace of growth in London in the first half of 2015 has been mixed. Demand is still strong but the falling Euro is a key issue.
Overall for 2015, PwC expects London to see occupancy growth of 1% taking occupancy to 84%. ADR growth is forecast to be 1.8%, taking ADR to £142. The increase in occupancy and ADR is partly due to the Rugby World Cup in the second half of 2015. This drives RevPAR growth of 2.7%, taking RevPAR to £119.
Looking ahead to 2016, we forecast more growth but at a slower pace with marginal occupancy growth of 0.3% that will keep occupancy at 84% and a 2.2% growth in ADR which will mean rates of £145. This combination will drive RevPAR growth of 2.3% to take yields to £122.
The regions have experienced a very good-year-to-date. Around the country, most cities have continued to see very strong RevPAR growth. Growth has come from a mix of occupancy and ADR, but particularly from rates. Exceptions include Aberdeen, which has seen both occupancy and ADR falls drive an 18% RevPAR decline to June. Many cities continue to see double digit RevPAR growth, including Belfast, Bristol, Birmingham, Coventry, Liverpool, Nottingham, Plymouth and Southampton.
Overall strong trading and low supply mean that for 2015 PwC expects 1.6% occupancy growth, taking occupancy to 76% and ADR growth of 4.6%, taking rates to £67. This mean RevPAR growth will be 6.3%, nudging RevPAR to £51.
We forecasts further growth in 2016, but just not at the same pace with a 0.6% gain taking occupancy to 77%. ADR growth is predicted to fall to 3.5%, taking rates too£69. This means RevPAR growth of 4.2%, taking RevPAR to £53.