Hotel operators to face “challenging” year ahead

Martha Elwell Martha Elwell Uploaded 18 December 2017

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UK: HVS has released predictions for the industry in the next year

The New Year is likely to be challenging for the UK's hotel operators with flat occupancy levels and increasing overheads despite positive global and EU economic growth, according to hospitality consultancy firm HVS.

The combination of wages going up, staff shortages, increasing costs, and the impact of higher property taxes and business rates, as well as a strong pipeline of new hotels, will put pressure on UK hotels' operating margins over the next 12 months.

However, despite little occupancy growth, yields are likely to increase slightly with average daily rate and rooms revenue per available room rising by an anticipated 5% in London and 3% in the regions.

Leisure travel for the year ahead will remain strong in the UK, particularly while the pound is relatively weak. While there is a deceleration in UK GDP growth, there will still be growth and the overall outlook for travel into the UK remains positive.

Russell Kett, chairman of HVS London said: "Next year will truly sift the good from the average, particularly in cities with an increasing supply of hotels, such as London. Operators need to maximize revenue from every bit of space and keep a tight control on overheads. The message to tourists must be that the UK is still very much open for business."

Kett also predicts that 2018 will bring further consolidation across Europe's hotel sector, as hotels become an increasingly attractive trading asset amongst institutional investors.

He added: "Recent takeovers by Marriott and Accor have intensified the appetites of global investors to see the macro financial benefits of such consolidations - potentially bringing together the likes of IHG or Hyatt with other hotel groups," he said. "Both could be the target of others - or they could be the acquirers."

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