London’s Mojo is Returning as Hotel Occupancy Rates Recover

Recovering occupancy rates and food and beverage sales are combining to fuel a marked recovery in the London hotels market, according to the RSM Hotels Tracker.

“The data, compiled and produced by Hotstats and analysed by RSM UK shows that for the first time since prior to the pandemic, occupancy rates in London are now close to exceeding the rest of the UK (66.9% compared to UK rates of 68.4% in May).”

Revenue generated from the sale of food and beverage has not only recovered to pre-pandemic levels, but the gap in revenue generation between London (£50.31 per occupied room) and the rest of the UK (£41.97 per occupied room) has widened.

However, occupancy rates have recovered at a slower rate than anticipated. This is partly due to lower international and business travel which is also impacting UK high streets. According to RSM UK’s analysis of data from Datscha, footfall is 48% lower than pre-pandemic levels, driven by London (down 68%), Newcastle (down 67%) and Glasgow (down 67%)*.

Average daily rates (ADR) of occupied rooms in UK hotels increased from £123.30 in April to £135.50 in May, surpassing pre-pandemic rates of £119.50 in 2019. Revenue per available room jumped from £77.30 in April to £92.70 in May, while London saw an even bigger increase of £32.00 to £140.10 in May.

Chris Tate, head of hotels and accommodation at RSM UK, said:
“The continued growth in hotel occupancy in London means it is edging closer to overtaking the rest of the UK – suggesting the city is slowly getting its mojo back. In addition, with China coming out of lockdown and international travel expected to be back in full force during the summer months, this should improve occupancy even further and close the gap between pre-pandemic and future rates.

‘The hotel sector is currently facing a number of headwinds in the form of inflationary pres
sures, the cost of living crisis and consumer confidence reaching another all-time low in May. As a result, recovery will undoubtably feel like an uphill battle for hoteliers.

‘However, rather than succumbing to the various economic pressures, many hotels are benefiting from the return of corporate hospitality and are becoming more inventive by exploiting other revenue streams such as food and beverage.