22 May 2017
Welcome to this edition of BDO’s HotelQuarters – Q1 2017, a quarterly review of the hotel sector in the UK.
In the first quarter of 2017, UK hotels saw continued strong growth with overall rooms yield up by 4.9%. Results for regional hotels remained positive despite not being as strong as those seen in the Capital. While regional UK hotels posted an overall 1.1% increase in rooms yield, London hotels grew by a robust 9.7% to £109.18.
The flow of new supply seems to have shifted to the regional market where occupancy marginally decreased by 0.7% to 68.5%. The positive results in AARR, up by 2.0%, helped to improve the trading results of hotels in the regions. The second quarter of the year is poised to be more positive, with both occupancy and AARR helped by events such as the final of the UEFA Champions League in Cardiff in June.
Strong results experienced in both occupancy and AARR resulted in positive performance across all London hotel segments for the first quarter of the year. The continued favourable exchange rates for inbound visits, along with the reduced new supply coming into the Capital, helped to keep occupancy high. The astonishing double digit March year to date results for some of London hotel segments cannot be explained without taking into account the weak performance experienced during the same period a year earlier. However, London hotels are trading above expectations and showing signs of a comeback, now that the increase in supply is more sustained and demand remains at its highest.