Hotel industry benefits from welcome boost in February
Demand in the UK hotels sector started to pick up in February, boosted by half-term holiday staycations, according to the RSM Hotels Tracker.
The data, which is compiled and produced by Hotstats and analysed by RSM UK, shows occupancy jumped to 71.4% in the UK and 73.2% in London last month; up from 68% and 68.2% respectively in February 2022, and exceeding pre-pandemic levels of 70.4% (UK) and 70.5% (London).
Average daily rates (ADR) of occupied rooms increased slightly to £127.19 in the UK and £188.15 in London last month. While largely in line with the room rates in February 2022, they are up significantly from pre-pandemic rates of £107.98 (UK) and £169.10 (London). RevPAR of UK hotels increased £6.03 to £90.8 year-on-year in February and rose by £8.65 to £137.69 for London hotels.
Gross operating profits (GOP) increased to 26.1% in the UK and to 31.0% in London last month. GOP is ahead of February 2022, at 24% in the UK and 29.1% in London, and is slowly catching up to the same period in 2020, at 29.2% and 35.4% respectively.
Chris Tate, head of hotels and accommodation at RSM UK, said: “In what tends to be a typically quiet period for the hotel industry, February was a relatively strong month. Hoteliers will be relieved to see the slower start to the year has already started to pick up, boosted by romantic getaways for Valentines Day and households opting for a UK break during the half-term holiday.
“While the wider leisure and hospitality industry achieved only a modest increase in sales last month according to the CGA RSM Hospitality Business Tracker and growth was flat for retail sales, it seems the hotel industry continues to be the most resilient when facing current headwinds. Encouragingly, the outlook also remains positive, helped by the recovery of the UK economy and improving consumer confidence as households start to feel like they have more money in their pocket.”
Thomas Pugh, economist at RSM UK: “The strength of the hotel sector in February is another piece of evidence that suggests last year’s recession is already over. It is also a sign that consumers’ preference for spending on experiences over goods remains intact.
“Looking ahead, there are reasons to be positive about the outlook over the next two years. Inflation should fall back below the Bank of England’s 2% target in April and remain below it for most of this year, combined with decent wage growth that will cause households’ real incomes to rise rapidly. Throw in another 2p cut in National Insurance and households’ incomes look much stronger in the second half of this year. What’s more, the sharp fall in inflation will set the stage for interest rate cuts from June.
“As consumer confidence improves, households will spend more of this new found income, and if the propensity to spend on experiences remains, then the hotel sector should be a major beneficiary.”
