Research by STR to reveal new insight into UK hospitality market at MIPIM UK
Paris, 18 September, 2018 - A new white paper prepared by data and analytics provider STR, with consultants from PKF hotelexperts, reports that the UK’s hotel sector has experienced 4% annual growth in revenue per available room (RevPAR) since 2010.
The STR research will be presented at MIPIM UK on 17th October at 3pm, showing that hotels in the UK have enjoyed a buoyant decade, with an average of over 4% annual growth in RevPAR since 2010. This has mostly been the result of strong increases in demand, which grew 2.6% on average from 2010 through to July 2018.
This mix has driven occupancy rates up, pushing the metric to all-time highs above the 77% mark each year from 2015-17. At 76.7%, 2018 is on course to continue the trend. The strong occupancy performance has given hoteliers reason to lift average daily rate (ADR), which exceeded £92 in July 2018—this was the highest ADR for any month in STR’s database for the market.
As a result of this performance strength, the hotel sector has been sought out for its potential in terms of profitability yields and return on investment. Hotels have generally outperformed other real estate sectors in terms of yield in recent years, due to strong profitability performance levels. Over the past four years, UK hotels have seen gross operating profit (GOP) grow at an average of 3% per annum.
The success of the hotel business model as a means of return on investment, especially buoyed by its strong performance, has allowed a blossoming of real estate investment in the sector, with the UK continuing to top the market in terms of transaction value in Europe.
Ronan Vaspart, Director of MIPIM Events at Reed MIDEM said, “We are very pleased to work with PKF, our partner for the hospitality programme, and STR to present this research at MIPIM UK which reveals the data behind the buoyant UK hospitality sector. At MIPIM UK this October, we will have the opportunity to explore further the future of the hospitality market in two dedicated discussions around the game-changing investment trends in the UK.”
“We have seen consistent growth across the UK in recent years as demand continues to increase,” said Thomas Emanuel, STR’s director of business development. “That growth in demand has lifted occupancy levels and led hoteliers to push ADR. High absolute occupancy levels have not just been limited to London—other regional cities have been strong when compared internationally.”
The research also predicts hybrid forms of hotel accommodation from private club hotels, ‘urban resorts’ such as the Village Club Hotel, and co-working operators like WeWork expanding into living accommodation with WeLive.
Statistics from STR show that in July there were around 22,700 rooms of serviced apartments in the UK, accounting for 3.5% of the total hotel supply in the country. While the segment can be considered small when compared with the total accommodation landscape, it is interesting to note that year-to-date performance through July 2018 reveals that serviced apartments in the UK achieved higher occupancy (79.0%) and ADR (£127) levels, compared to 76.7% occupancy and ADR of £92 in the hotel sector. This suggests that there is scope for this segment to be more profitable operationally when compared with the average UK hotel.
Looking to the future, according to Oxford Economics, tourist arrivals to the UK are expected to grow 3.3% in 2018 and 2.9% in 2019. This will likely create opportunities for hotels to capitalise on international business, and STR expects demand will keep rising steadily over the next five years.
London’s hotel inventory is expected to increase at an average pace of 2.9% per annum over the next three years. Outside London, inventory is expected to rise above the 3% mark in 2019 and 2020 - the strongest increase since 2008. The balance between supply and demand will play a crucial role over the next year and beyond for hotels throughout the UK.
The white paper is available to view in full on our pressroom.
Further insight can be gained at the three hospitality pitching sessions taking place in the Innovation Room at MIPIM UK this year, where new hotel brands and projects (Wednesday October 17th, and Thursday October 18th at 10am) and serviced apartment projects (Thursday October 17th at 2pm) will be presented.
Brands presenting at the Pitching sessions include:
• Accor hotels
• Code Hostel
• Citizen M
• The Student Hotel
• Village Hotel Club
In addition to the pitching sessions, MIPIM UK will be hosting a short conference programme, with a presentation by STR and two high level panel sessions:
Game-changing lifestyle and hospitality concepts
Scheduled on Oct 17: 3pm-3:45pm
Synopsis: Get acquainted with the game-changer destinations, decision makers and drivers for the evolving hospitality industry.
• Coley Brenan, Partner and Head of Europe at KSL Capital Partners
• Julien Mattei, Investment Director at The Student Hotel
• Tom Walsh, CEO Staycity Serviced Apartments
• Adam Maclennan, Managing Director, PKF hotelexperts Ltd
Hotel innovation in a disruptive world
Scheduled on Oct 17: 4pm-4:45pm
Synopsis: In recent years, the coexistence between OTA’s and hotels, has fallen on hard times. Millennials hold the largest travel market share at 33% and, 52% of Millennials prefer to book their hotels via an OTA. How does the traditional market react to emerging trends and the need to differentiate to win?
• Carmen Hui, Commercial Director, Owner Partnerships, Booking.com
• Nicholas Chadwick, SVP hotel Asset Management at Starwood Capital
Follow this link here to view to full MIPIM UK conference programme.
For UK media inquiries, please contact:
Tom ELLIOTT, Associate Director, ING Media
For international media inquiries, please contact:
My-Lan CAO, Real Estate Press Director