Fragile consumer confidence hits hotel demand
Record breaking rainfall and a drop in consumer confidence led to lacklustre demand in the hotel industry in September, according to the RSM Hotels Tracker.
The data, which is compiled and produced by Hotstats and analysed by RSM UK, shows occupancy of UK hotels was up slightly from 81.9% to 82.7% in September year-on-year, and from 82.3% to 83.6% in London during the same period.
Average daily rates (ADR) of occupied rooms were down in the UK, from £155.25 to £153.21 in September year-on-year, while London saw a bigger drop from £227.24 to £218.11 in the same period. Gross operating profits (GOP) were relatively flat in the UK and London in September, at 40.3% and 44% respectively, and were both down 0.5% when compared to the same month last year.
Chris Tate, head of hotels and accommodation at leading audit, tax and consulting firm RSM UK, said: “While the hotel industry ended the summer on a high, the wet weather and a slump in consumer confidence in the lead up to the Budget, dampened hotel demand in September.
“The decrease in room rates suggest they have reached their peak, with consumers unwilling to pay more for their stay. If hoteliers try to pass on any further price increases, there’s a risk this will hit demand.
“The outlook for next year in the hotel sector is positive, but hoteliers need to focus on how best to manage their costs. If the chancellor introduces tax hikes that increase employment costs, including employers’ National Insurance contributions, this will make it increasingly difficult for the industry to hire staff, and in some cases, hold onto existing employees. The hope is that once the Budget is out of the way, this will give consumers and businesses the stability and certainty they need to carry out their spending intentions ahead of the all-important festive period.”