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UK hotel update: London performance stays strong while Manchester posts declines

Following recent terror attacks in London and Manchester, STR continues to monitor how these attacks are impacting hotel performance. 

Overall, the U.K. has experienced strong performance levels so far this year, posting a 10.7% year-over-year growth in RevPAR for the first five months of the year. The pound devaluation following the Brexit vote last summer has benefitted the country’s tourism. According to April data from VisitBritain, the U.K. has seen an influx of arrivals, most notably from holiday travellers, up 26% as of April year-to-date. 

Manchester

An initial analysis released by STR on 21 June indicated that Manchester experienced a minor year-over-year drop in occupancy the day after the 4 June bombing at the Ariana Grande concert, before returning to growth the following day. Updated daily figures show that the market’s performance suffered throughout the month, with 19 days of occupancy declines in June. While an initial reaction could be to attribute this to the attack, another factor to keep in mind is that the market hosted the U20 World Rugby Championship in June 2016, impacting the year-over-year comparisons. Preliminary June data shows a 5.1% decline in occupancy and a 5.2% decline in ADR.

STR’s latest market forecast projects that Manchester hotels will close 2017 with overall positive performance. Demand should remain high due to strong economic factors, stimulating increases in ADR of around 2%. Increases in hotel supply, however, will likely impact the market’s occupancy levels, which we expect to be negative for the year.   

London

Our previous analysis suggested that the 3 June London Bridge attack may be impacting the capital’s performance more significantly than previous attacks this year have. Updated figures show performance declines in the days following the attack (6-9 June), with a return to growth towards the end of the month. 

Preliminary data for June shows a 5.1% increase in RevPAR, with a 5.5% ADR growth counterbalancing a 0.4% drop in occupancy for the month. While this would be London’s first month of the year with a decline in occupancy, it is encouraging to see that the market’s hotels are maintaining rate growth.   

STR’s market forecast projects that London hotels should continue recording performance growth through the rest of the year.   So far, demand levels have exceeded previous expectations, resulting in consistent occupancy growth prior to June. ADR should be the main factor driving performance growth, with an expected year-end increase of about 5%. 

As previously mentioned, STR would like to stress that it is essential to analyse a longer time period and more complete dataset before drawing definitive conclusions. The purpose of these updates are to keep you informed about occurrences and performance trends impacting the U.K.’s hotel industry. 

We will continue to monitor the U.K.’s performance and will send updates if we identify any major shifts in hotel demand or rates. If you have any further questions, please get in touch with your STR representative at any time.