RevPAR in the UK’s regional hotels dropped 2.8 per cent in the first three months of 2019, according to research from HVS London, AlixPartners and STR.
The fall was in marked contrast to the fortunes of London’s hotels, which saw like-for-like RevPAR increase by 3.6 per cent against the previous year.
Hotels in the capital also saw occupancy reach 77 per cent, up 1.7 per cent, while average room rates rose 1.9 per cent to £134.
Strong performance in the last two quarters lifted the last 12 months’ RevPAR 4.1 per cent, despite a relatively subdued six months trading.
According to the UK Hotel Market Tracker: Quarter One 2019, regional hotel occupancy dropped 0.7 per cent to 68 per cent in the first three months of the year, with average room rates down 2.1 per cent to £64.95 and RevPAR down 2.8 per cent to £44.04 - the first quarterly decline since 2012.
“London’s performance in the early months of 2019 was helped by the Six Nations rugby tournament and Passenger Terminal Expo at ExCel,” commented HVS chairman Russell Kett.
“Conversely outside London hotel performance was adversely affected by supply growth causing hotels to discount more aggressively in many locations.
“Ultimately this new supply should be absorbed but the effects of Brexit are also to blame for this,” he added.
The tracker predicts that with further cost increases expected for the remainder of 2019 and capex requirements continuing, regional hotels and investors will be keeping a close eye on cash flow through the remainder of the year.
The first quarter of the year proved active for transactions, however, with £2 billion worth of hotels being acquired in some 91 transactions, compared with 85 the previous year.
Major London deals in quarter one included the sale of four Grange hotels to Queensgate for £1 billion and the acquisition of Dalata’s Clayton Hotel, Aldgate, for £91 million.
Regional transactions included Topland’s sale of 26 Hallmark Hotels for £250 million.