Hotel market set to experience further growth in 2015

Richard Carr, an operator in the UK hotel market, was pleased to read the latest report from CBRE hotels, which suggests that there is ‘considerable headroom’ for further revenue and profit growth in 2015.

Strong occupancy driving growth in the sector

Richard Carr Hotel

Regional hotels benefit from growing UK Economy

The report also reviewed last year’s performance, which saw the UK regional hotel market experience 9.2% revenue per available room.

Growth was also experienced on meetings and events, with revenue per square metre of conference space up 7.6% year on year in 2014.

The report suggested that the UK’s regional hotel performance was in part a result of the country’s continued economic recovery. Britain’s GDP is ahead of any other G7 counterpart in terms of growth, whilst unemployment levels are now at pre-recession levels.

Investors also stood up and took notice of the sector’s strong performance, with hotel transactions volumes surging to over £4bn in 2014, up 250% year-on-year.

Looking ahead

Like a number of markets in the UK, the hotel industry benefitted from a low inflation rate (0.5%) and more recently falling oil prices. As a result, household spending has increased on things outside of essentials.

CBRE Hotels Executive Director, Robert Seabrook, said: “From an occupancy base of 75% and apparent headroom across other metrics, provincial hotel operates have an opportunity for unconstrained performance growth with improvement in rate which will markedly boost total revenue and fall through to the bottom line.”

An increase in regional supply is ‘inevitable’ according to CBRE given the recent performance and health of the hotel industry. Taking into account the growing consumer spend and confidence as well as the potential for the market to continue improving, the UK’s regional market is an attractive prospect.

There is worry about the market becoming overcrowded though, as the report explained that based on the completion of all developments currently in the construction pipeline, the increase would be ‘nominal’ at 2.1% this year and 1.5% in 2016.

More time and money for holidays!

Richard Carr believes that this rise is the product of a better economy and more people taking short breaks as a matter of course.

It has become noticeable the amount of people who do not work during the school’s half-term holidays and instead take the family on a short break.

With the economy improving children’s holidays have become family short-break holidays, which give everyone in the Family a rest!

 

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