PwC forecasts 2017 to be record year for hotels in the provinces

The latest report from PwC has revealed that 2017 would be the highest on record for hotels in the provinces, with properties on track for a 77% occupancy rate this year.

In the study the forecast for London however remains cautious, with a year-on-year occupancy decline of 1.8% predicted and a further marginal decrease of 0.8% in 2017, taking occupancy down a percentage point to 80%.

In contrast, many cities in the Provinces have experienced a good year-to-date with overall regional RevPAR up 2.6% to June, albeit the pace of growth continued to slow and occupancy levels fell in many cities.

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RevPAR was up 4.3% in the provinces according to STR Global and cities faring well included Birmingham – RevPAR was up 9.5% – Brighton – a gain of 10.7% – Manchester – up 6.6%- and in Wales Cardiff RevPAR was up 4.3%, and in Scotland, Edinburgh enjoyed a 6% growth.

Liz Hall, head of hospitality and leisure research at PwC said: “Regional occupancies have climbed back into the 70% mark since 2011 and have been creeping up since then, hitting 76% in 2015 and 77% in 2016. Our forecast for 77% this year and in 2017 would be the highest on record, driven partly by structural supply shifts towards a greater proportion of budget rooms.”

A drop-off in demand for London hotels contributed to a disappointing H1 2016, with RevPAR declines of 3.5% to June.

In terms of demand, according to the data, there will be around 625,000 rooms open across the UK by the end of 2016 with a further 18,000 rooms forecast to be added in 2017.

Of this total, over 7,000 rooms are expected to open in London in 2017 – about the same as the combined 2017 pipelines for Edinburgh, Manchester, Aberdeen, Belfast, Birmingham, Cambridge, Liverpool, Leeds, Glasgow and Bath.

Hall added: “Uncertainty is dangerous and lower confidence pre and post the EU Referendum, as well as an economic slowdown, have impacted corporate budgets and travel, a vital segment for hotels. Hoteliers will need to make up for this by attracting more leisure travellers.

“But, a slow absorption of new rooms in London and some regional cities may put pressure on trading. Add to this mix, brisk growth in serviced apartments and Airbnb listings and it’s a case of weaker demand chasing more rooms.”

“However, falling sterling may bring some short term benefits to leisure tourism to London and international destinations such as Edinburgh. It may also result in more staycations across the United Kingdom.”




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