Hotels in the UK are experiencing a post-Covid rebound, according to figures from Knight Frank.
London hotels reached an occupancy rate of 82% in June 2023, a rise of 3.2 percentage points year-on-year. Hotels outside the capital recorded a four percentage point bump to almost 81% occupancy.
But Knight Frank noted that, with seasonal demand remaining robust and persistent high inflation, many hotel operators were continuing to pursue a strategy of rate maximisation in lieu of full occupancy recovery.
Average daily rates grew in London by 8.5% in June and by 7.6% outside the capital. This has also resulted in an improvement on 2019 levels, with hotels in London and the regions recording ADR growth of 23% during H1 2023 compared with the same period in 2019.
London’s luxury hotels achieved an ADR growth of 38% during this period, while golf resorts and spa hotels saw a 40% increase.
Knight Frank noted that hotel recovery had been stimulated by a renewed influx of overseas visitors, with total overseas passenger arrivals of 6.68m – just 1.9% below June 2019.
Revenue growth has remained strong despite rising costs, with London recording a H1 2023 growth of 37% versus H1 2022 and the regions seeing 17% growth over the same period.
Profit margins are now just slightly below 2019 performance, while gross operating profit per room was up by 42% for London over H1 and up by 16% for the regions.
Karen Callahan, head of hotel valuation and partner at Knight Frank, said: “London’s performance during the first half of the year has seen ADR growth continue to trend upwards and, along with much improved occupancy levels, this strong occupational performance is supporting profit margins and GOPPAR (gross operating profit per available room) growth.
“This is a welcome counterbalance to the softening of yields that has resulted from the increasing cost of debt, and with hotels acting as an inflation hedge, investor appetite for the sector remains strong.”
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