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1 May 2019

What the Future Holds For the Hotel Industry

What the Future Holds For the Hotel Industry

The hospitality industry is one of the most important parts of the British economy, with total turnover reaching £98bn in 2017 – up from £92bn in 2016 and £86bn in 2015, according to data from the Office of National Statistics.

A huge contributing factor to the hospitality sector in the UK is the hotel industry, which according to analysis by Statista generated a turnover of approximately £19.4bn in 2017.

But with Brexit still on the horizon and the Great British Pound being at a lower level than previously experienced, should hoteliers be worried moving forward and how is the market currently performing?

The Capital Stays Strong

According to PwC’s Hotels Forecast 2019, trading growth is set to flatten in the year ahead due to economic uncertainty, weak business travel demand and an influx of new rooms scheduled to open across the country in the year ahead.

The report found that the outlook for London has levelled out with a year-on-year occupancy growth of only 0.1% and a marginal fall of 0.5% forecast for 2019, which will see occupancy levels drop one percentage point to 81% in 2019.

The research also found that Average Daily Rate (ADR) is forecast to see a marginal uplift over the next year, with 0.2% growth for 2018.

Revenue per available room (RevPAR) growth will remain static with 0.3% forecast for both 2018 and 2019; a big contrast to the 4.6% growth in 2017.

Outlook for the Regions

The findings from PwC revealed that occupancy levels in the regions across the UK have been averaging 76% since 2015 and are forecast to remain around this level for the next year. ADR growth is forecast to slow compared to 2017, with an anticipated 1.3% increase for 2018. Meanwhile, RevPAR is forecast to see a 1% uplift and a further 1.2% in 2019.

Commenting on the results from the report around the regions, Liz added: “Our forecast shows RevPAR in the regions to end 2019 23% ahead of pre-recession peaks in nominal terms but lagging in real terms by 7%. Demand continues to be driven by inbound tourism, domestic holidays and events.

“Occupancy rates have been creeping up from 66% in 2009 to an average of 76% in 2015. We forecast rates to remain at this level despite over 40,000 rooms to be added in the regions in 2018 and 2019. A continuing structural supply shift towards a greater proportion of budget rooms will sustain occupancy levels.”

Signature Living Strengthens Social Commitment Creating 1,500 Jobs with Living Wages

The Signature brand has been outperforming its competition in terms of occupancy rates for a number of years. Much of this success has been attributed to the brand’s firm commitment to providing jobs with living wages and career growth potential. As a result of our ethos towards its staff, Signature has built a strong and loyal team that continues to power the brand’s expansion.

Many of the reasons the hospitality sector constantly faces recruitment challenges which negatively impact their bottom line is due to the seasonal nature of the hotel business. However, Signature Living does not feel that this is reason enough to keep people financially suspended with zero hours contracts (ZHCs), an increasingly common way of employing people on an ad hoc basis.

The brand has always made a concerted effort to ensure occupancy rates at its hotels are consistent throughout the year. This is done in various ways including offering a truly exclusive guest experience and providing venues for important life celebrations and events. This ensures its hotels always enjoy occupancy rates in the 90s and that staff have job security irrespective of the season.

The Signature hotel brand is one of the most disruptive in the hospitality industry, continuously developing innovative hotels offering exclusive experiences for patrons. The British tourism sector continues to go from strength to strength in 2019 and Signature is at the forefront of the boom. Find out more about how you can earn valuable returns from a short-term investment in the award-winning Signature hotel brand by contacting an adviser today.

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