PwC report: spike in available new UK hotel rooms to stymie growth

The outlook for hotel trading in the UK will remain flat throughout 2019, thanks to a surge in room supply, slowing global and UK economic growth and ongoing uncertainty relating to Brexit.

The prediction was made in a report by PricewaterhouseCooper, which sees the UK hotel sector entering a "challenging environment for performance growth".

PwC’s latest UK Hotels Forecast Update shows that while London should still boast relatively high occupancy levels, the high room supply levels mean that occupancy growth this year will be marginal at 0.3 per cent.

Other predictions include that revenue per available room (RevPAR) will grow by 1.7 per cent in 2019, taking RevPAR in the capital to £126.

In 2020, growth is anticipated to see a further 1.4 per cent rise, taking RevPAR to £128.

The picture is the same for hotels outside the capital, as high supply additions in many cities continue to affect hotel trading.

PwC's forecast shows that, for 2019, occupancy outside London will see a marginal fall of 0.1 per cent, while RevPAR is predicted to edge up by 0.4 per cent to £55.1.

“London saw stronger than expected demand in the last three months of 2018 which transformed the year for the capital," said David Trunkfield, head of hospitality and leisure at PwC.

“Early signs in 2019 are that January has continued to see some good growth, with record occupancy levels and ADR gains driving RevPAR growth to over 5 per cent.

"Weekend demand remains strong and the weak pound continues to support tourism and hotels, however there are worries that tourists, especially from the EU, may adapt a 'wait and see' attitude towards visiting the UK in 2019.

“While new supply grew by 2 per cent in 2018 it is forecast to increase by a further 4% in London this year and with uncertain demand, weaker corporate travel trends and no blockbuster events scheduled this year, this could dampen hotel performance."