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UK hotel growth could see rates slow down

Corporates could benefit from lower hotel rates in the year ahead as the latest Hotel Bulletin suggests new supply could outstrip demand.

The Q4 2015 report, published by HVS, AlixPartners and AM:PM, says London is to gain a further 7,000 hotel rooms this year while growth in demand remains subdued.

Across the UK, 16,000 hotel rooms are expected to open this year compared with 10,000 last year.

HVS chairman Russell Kett said: “The huge amount of openings planned for 2016 in London will be of concern to the city’s hoteliers who, while historically are used to robust performance, are currently experiencing limited demand growth”.

This is good news for business travel managers as “flat or declining occupancy is historically followed by plateauing rates indicating that a peak in hotel market trading may nearly have been reached,” says Kett.

Over half of the UK’s development pipeline opening within the next three years is in the budget sector. Four star properties account for 28%, apartments account for 9% and a further 9% are five-star hotels.

RevPAR (revenue per available room) growth across 12 UK cities in Q4 2015 was an average of 2%, significantly lover than the 19% average growth recorded over the same period in 2014.

London’s occupancy declined for the fourth consecutive quarter and over the last year fell in eight of the 12 cities.

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