Hoteliers end summer on a high but tourist tax risks stifling demand
The UK hotel industry ended the summer on a high, driven by a run of major events, but fears are growing that the government’s tourist tax could stifle future demand, according to the RSM UK Hotels Tracker.
The data, which is compiled and produced by Hotstats and analysed by RSM UK, shows occupancy of UK hotels was up slightly from 82.3% in August 2025 to 82.8% in August 2026 and was flat at 84.4% in London.
Average daily rates (ADR) of occupied rooms in the UK rose from £152.80 in August 2025 to £156.38 in August 2026 and was up from £210.44 to £214.90 in London. Revenue per available room (RevPAR) in the UK also increased from £125.79 in August 2025 to £129.48 in August 2026 and from £177.62 to £181.38 in London.
However, gross operating profits of UK hotels fell from 37.2% in August 2025 to 36.3% in August 2026 and were down from 39.4% to 37.5% in London.
Chris Tate, partner and head of hotels at RSM UK, said: “The hotel industry ended the summer on a high, as people made the most of the good weather and enjoyed a UK staycation. Major events such as the Bruno Mars and Harry Styles’ concerts also boosted hotel demand, as we saw with the Oasis reunion last year and Taylor Swift’s tour in 2024. In fact, occupancy levels in London have remained at 84.4% in August for three years in a row driven by these big acts, up from 80% in August 2023, highlighting the importance of such events to the hotel and wider hospitality industry.
“However, even with strong occupancy and room rates, greater cost pressures mean that hoteliers’ profit margins continue to shrink. There’s only so much the industry can increase room rates to help them manage higher costs, which will be exacerbated further by the government’s tourist tax. Hoteliers will face the tough decision of passing on the cost to consumers which risks stifling demand or absorbing yet another tax rise themselves.”
Thomas Pugh, chief economist at RSM UK, added: “Households have proved surprisingly resilient through this year and strong spending on hotels is another factor suggesting that consumer spending remained robust throughout the summer.
“Overall, households seem to be smoothing through the hit to their incomes from higher energy and financing costs by saving a bit less and borrowing more. However, the outlook for the second half of the year has worsened with the recent resurgence in energy prices. Inflation is set to jump to around 4.5% early next year and real household income growth will stagnate or even turn negative. That will inevitably weigh on discretionary spending, including hotel stays.”