Regional UK REVPAR falls for first time in seven years

UK: Regional hotel occupancy dropped 0.7 per cent to 68 per cent in Q1 2019, with average room rate down 2.1 per cent to £64.95.

RevPAR in the UK’s regional hotels fell 2.8 per cent in Q1 2019, according to the latest UK Hotel Market Tracker produced by HVS London, AlixPartners and STR, the first quarterly drop since 2012.

In contrast, London hotels saw like-for-like RevPAR up 3.6 per cent against the previous year while occupancy reached 77 per cent, up 1.7 per cent, and average room rates up 1.9 per cent to £134.05. Strong performance in the last two quarters lifted the last 12 months’ RevPAR 4.1 per cent, despite a relatively subdued six months trading.

HVS chairman Russell Kett said: “London’s performance in the early months of 2019 was helped by the Six Nations rugby tournament and Passenger Terminal Expo at ExCel. Conversely outside London hotel performance was adversely affected by supply growth causing hotels to discount more aggressively in many locations. Ultimately this new supply should be absorbed but the effects of Brexit are also to blame for this.”

Q1 2019 saw £2 billion-worth of hotels being acquired in some 91 transactions, compared with 85 the previous year. Major London deals in Q1 included the sale of four Grange hotels to Queensgate for £1 billion and the acquisition of Dalata’s Clayton Hotel, Aldgate for £91 million. Regional transactions included Topland’s sale of 26 Hallmark Hotels for £250 million.

London’s pipeline in creased in Q1 from eight per cent to 10 per cent, as a percentage of supply.

Kett added: “London will always be a popular destination for both business and leisure hotels, but the ever-growing supply of rooms will mean that RevPAR growth will be more limited going forward as hotels vie to remain competitive and as the uncertainty over Brexit remains unresolved. There continues to be a significant amount of available capital in the hotel market with multiple investors looking closely at opportunities but not wanting to overpay, meaning that yields have not seen a discernible change this quarter.”

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