Cricket World Cup boosts London hotel performance
The ICC Cricket World Cup has boosted hotels' performance in London but failed to stop the regions sliding.
That is according to the UK Hotel Market Tracker: Q2 2019 produced by HVS London, AlixPartners and STR, which reports London recorded continued strong growth in the second quarter of the year as hoteliers pushed rates for visitors travelling to watch the cricket.
In contrast, regional revenue per available room (revpar) decreased for the second consecutive quarter, even with numerous matches being hosted outside of the capital. The report said the combination of top line retraction, cost pressures and unrelenting new supply is putting significant pressure on regional hotel margins.
With revenue declining, costs increasing and active pipeline remaining at 6% of current supply, operators may struggle to increase profitability, particularly in locations outside the main tourist hubs or without robust corporate activity.
Revpar in London increased by 6% in the second quarter, as hoteliers benefited from sporting events including the Cricket World Cup and Major League Baseball at the London Stadium.
Active pipeline (10% of current supply) will be monitored by operators in the capital given relatively flat occupancy, but a revpar increase of over 6% over the last 12 months demonstrates how robust demand remains.
£2.1b of transactions were completed in London in the 12 months to Q2 2019, an increase of 54% on the previous year. This figure was boosted by the sale of the Grange portfolio in Q1 (£1b) and the 163-bedroom Crowne Plaza Kensington in Q2 to a Singaporean consortium led by Heeton Holdings (£84m, or £513,000 per bedroom).
Yields in London and the regions remain tight in comparison to historical averages, although there was little evidence of further compression in Q2 2019, except in isolated cases in London.
