Positive 2014 outlook for UK hotels after economic recovery puts "fizz" into sector

Venues can expect "sustained and enhanced prospects" during 2014, according to analysis of the UK hotel sector.

Positive 2014 outlook for UK hotels after economic recovery puts
Positive 2014 outlook for UK hotels after economic recovery puts

PricewaterhouseCoopers (PwC) claims the improving economic backdrop has "put the fizz back" into the sector, with the regions expected to experience the highest average daily rate (ADR) and revenue per available room (RevPAR) levels since 2008.

The firm warns there is no room for complacency, however, as it will remain a "challenging environment" for hoteliers with consumer spending likely to remain squeezed until 2015.

The conference and meetings market remains below past peaks, it adds, but the economic recovery in the UK and calmer Eurozone will help stimulate business and leisure demand.

Liz Hall, head of hospitality and leisure research at PwC, said: "The economy has put the fizz back into the UK hotel sector with a return to confidence and stronger demand. Despite ADR levels still reflecting continuing consumer and corporate price sensitivity, it’s a very positive story. Continued economic recovery should mean sustained and enhanced prospects for hoteliers in 2014."

According to PwC, the London hotel scene performed better in 2013 than it had anticipated, with an annual average occupancy level of 83% meaning the capital is "effectively full up". London has "continued to soak up" new supply and is expected to do so in 2014, when a further 6,000 rooms open.

Next year, there will be "a return to normal" in London with stronger pricing and record RevPAR, a key industry metric, expected. Hall said: "It looks like occupancy, ADR and RevPAR are heading in one direction, with the right kind of growth to keep London on its upward trajectory in 2014. With occupancy already very high it’s likely to be ADR where the growth potential is largest."

Occupancy and ADR in the regions improved faster than PwC expected in 2013 and the outlook is positive for 2014. It expects ADR to reach almost £60 next year, the best result since 2009 although still below the 2008 peak. It predicts 1.8% RevPAR growth in the regions in 2014, taking it to nearly £42.50, the best result since 2008.

 

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