UK hotels face a challenging 2013 with those in the regions facing a tougher time than their counterparts in London, according to latest PwC research.
Weaker GDP growth is set to result in an overall 2% decline in UK revenue per available room (RevPAR) to just under £60.
While occupancy is expected to fall by only 0.7% to average around 72%, average daily rates could fall by 1.2% to just under £82.
Averages conceal London’s “star qualities” and a more “lacklustre” performance across diverse regional locations, the PwC UK hotel forecast says.
More hotels in the capital will mean a 2% fall in occupancy rates to 79%, marking a third year of decline.
This partly reflects a steep 6.5% rise in hotel rooms (7,700 rooms) in London last year with a further 4,600 rooms set to open this year.
The average daily rate in London will decline by 1.2% in 2013. But with rates averaging almost £137, this remains high by any city standard, PwC said.
PwC hospitality and leisure leader Robert Milburn said: “This updated UK hotel forecast reflects our latest thinking on hotel performance in 2013, with the forecast impacted by weaker UK economic prospects but also supported by a weaker pound.
“While we still anticipate overall trading declines in 2013, these falls are less sharp for London but more unfavourable for the regions than we expected in November 2012.”
The accountancy firm’s head of hospitality and leisure research Liz Hall added:“For travellers, a more affordable London is good news and will help the city capitalise on the positive media spotlight that shone in 2012.
“For hoteliers, RevPAR is expected to end the year at £108, 3.2% below 2012 levels but still 18% higher than 2009.
“The year hasn’t kicked off well and STR Global data for January shows a particularly weak performance in London.”
Turning to the regions, she said: “2012’s robust finish means we are starting our forecast from a stronger Q4 2012. So while the percentage declines are higher than previously predicted, the absolute numbers for 2013 are actually a little stronger than in our last forecast.
“We now anticipate only a marginal occupancy decline in the regions, leaving occupancy at a fairly healthy 70%, the same as in 2012.
“However, an expected 1.2% decline in ADR takes average rates to just over £58. This will drag RevPAR down by 1.4%, to £40.57 – virtually the same level as in 2010.”