Zolfo Cooper, HVS and AM:PM have released their Hotel Bulletin for Q3 2013.
Key findings for the quarter include:
- very encouraging continued regional performance growth in Q3 2013, with cities reviewed recording an average RevPAR increase of 8% over Q3 2012;
- increasing trend of profit conversion with regional profit growth running at 3% on a last twelve month basis after a long period of profit decline;
- demand in London growing at a greater rate than supply – only average rates failed to match the record one-off levels seen during the Olympics; and
- Q3 Focus: Olympic legacy – early signs of the wider UK hotel market benefitting from worldwide exposure caused by the Olympics.
Confidence has returned to the market
HVS London director Tim Smith commented:
“We are now confident enough to say that the recession in the UK’s hotel sector is effectively now over based on year on year growth to both revenue and profitability. Performance has been strong in the regions, with hotels in Aberdeen, Bath, Belfast and Edinburgh recording double digit RevPAR increases in Q3.
“The most encouraging fact about regional performance is that improvements have been quite broad based, in contrast with pockets of good performance recorded in recent years.
“Performance in London is also positive as, while hotels have recorded a 3% decline in RevPAR, demand has grown at a greater rate than supply and it is only average rates that have failed to match the one-off levels seen during the Olympics.
“The key issue is that confidence has returned to the market, because trading and profits have risen. That confidence is shown by more bank debt available, more transactions and an improved trading situation at the hotels. Therefore, we are definitely out of the worst and in a period of recovery,” added Smith.
The Hotel Bulletin reviews demand and supply trends in the UK market, the new-build pipeline, and considers notable transactions that have completed in the past three months. The data has been analysed by location to reflect the diverse nature of the UK market. This edition focuses on the impact of the Olympics on the UK hotel market in greater detail.
Demand data covers Occupancy, Average Room Rate and RevPAR for Q3 2013, comparing data points with Q3 2012 from HotStatsTM in order to draw conclusions on the state of the UK market. Similarly, supply data compares the numbers of rooms for each location at the end of Q3 2013 with Q3 2012 from the AM:PM database in order to examine hotel completion trends. In addition, pipeline data considers the number of rooms in development that have a confirmed opening date from AM:PM.
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