UK hotels end year on a high, but cost pressures set to worsen
Occupancy and room rates of UK hotels were up year-on-year in December, but profits remained flat as cost pressures started to bite, 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 from 70.3% to 71.6% in December year-on-year, and from 78.8% to 81.4% in London.
Average daily rates (ADR) of occupied rooms in the UK increased from £151.37 to £155.22 in December year-on-year, and from £223.12 to £230.73 in London. However, gross operating profits (GOP) were flat in London at 43.3% in December and down slightly from 35.4% to 34.7% in the UK.
Hotel payroll costs (per available room) were also up in the UK from £44.59 to £47.57 in December year-on-year, and from £59.07 to £63.52 in London, which is expected to worsen after the rise in employers’ National Insurance contributions and National Minimum Wage from April.
Chris Tate, head of hotels and accommodation at leading audit, tax and consulting firm RSM UK, said: “It was a positive end to the year for the hotel sector in 2024, with occupancy and room rates up on last year. This is particularly good news as hoteliers have found it difficult to increase room rates for most of 2024. However, hoteliers struggled to shift the dial on profits with little growth in December, which comes as a warning sign that cost pressures are starting to bite.
“While the hotel sector has demonstrated its resilience and adaptability over the years, several challenges are set to hit the industry in the coming months. Operational costs are expected to surge due to increases in employers’ National Insurance contributions and the National Minimum Wage, placing further strain on profits. Hoteliers that focus on productivity, investing in technology and creating efficiencies will be best placed to ride the storm.”