The omicron variant of COVID-19 has not unduly affected United Kingdom hotel performance, which is continuing to recover, according to analysis of hotel performance data from STR, CoStar's hospitality analytics firm.
The U.K. hotel industry in February posted revenue per available room of 61 pounds sterling ($80.38), which according to Cristina Balekjian, CoStar senior hospitality analyst for the U.K., is “more or less in line with its pre-pandemic levels” and a noticeable improvement over January RevPAR, which was approximately 34 pounds sterling.
The lifting of most COVID-19 restrictions in most of the constituent countries of the U.K. resulted in higher pent-up travel demand. There have been improvements in all demand segments, although leisure continues to be the main driver, with Saturday still the strongest night of the week for hotel performance, she said.
Weekday hotel room bookings in the country are expected to increase as more companies institute return-to-office policies and their employees start traveling again, she added.
Weekend average daily rate is the industry’s strong point.
“Saturday nights … are achieving rates nearly 20 pounds [sterling] ahead of weekday prices, further signaling the strength of the sector and hoteliers’ pricing power during high-demand nights,” Balekjian said.
Concerns, but Also Investor Confidence
Hoteliers in the U.K. still are concerned about potential impact from the invasion of Ukraine and increasing inflation, which could result in a dip in customer confidence and a subsequent decline in bookings.
“Although these factors do not seem to be affecting bookings yet, it will be important to monitor how booking patterns progress over the next few months,” Balekjian said.
She said investors remain active in the U.K. hospitality sector, which is a reason for optimism.
Portfolio deals already closed in 2022 include Leicester-based Atlas Hotels’ six-asset deal in Scotland that involved 569 rooms and resulted in the firm, part of London + Regional Hotels, becoming IHG Hotels & Resort’s single largest franchisee in Europe.
Balekjian said international investor interest is also growing for well-located hotel assets in major U.K. city centers and gateways.
Editor’s note: The video included in this article was filmed by Cristina Balekjian, senior hospitality analysts, United Kingdom, at CoStar, on March 21, 2022, and edited and produced by CoStar Group. HNN is a division of STR, a CoStar Group company.