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UK hotel growth expected to slow in 2018, says PwC

PwC's UK Hotels Forecast 2018 forecasts slowdown, but finds that the outlook is broadly positive for the sector

Growth in the UK hotel sector in 2018 is not expected to match 2017, according to the PwC's UK Hotels Forecast 2018.

However, the report finds that the outlook is broadly positive for the sector.

The report’s authors, hospitality expert David Trunkfield and senior economic adviser at PwC Dr Andrew Sentence, said that the UK hotels business in 2017 has been boosted by two main factors: the growth of the global economy helping to encourage overseas visitors to travel more generally; and the fall in the value of the pound since the Brexit vote last year, which has provided an added incentive for visitors to come to the UK.

The report said: “Looking ahead we should continue to see these positive factors supporting growth in 2018, but to a lesser extent. In addition, Brexit uncertainty is a possible dampener on business travel to the UK, and there are some signs that this is already having an impact. The slowdown in the UK economy may also subdue domestic spending on hotels. We cannot therefore expect the growth in 2018 to match 2017, even though the outlook is broadly positive for the UK hotels sector.

“A spike in new hotel supply, especially in London, will also act as a drag.”

For London, the stronger than anticipated tourism boom in H1 2017 means that PwC has edged up its latest forecast for 2017 and now expects around 6 per cent RevPAR growth for the year as a whole. However, the authors do not expect this strong growth to be sustained as uncertainty weighs on the economy and the effect of the weak pound slows.

The report said: “For 2018, we are anticipating around 2.4 per cent RevPAR growth, a strong outcome against tough comps and an expected 7,000 new hotel rooms. In contrast, for 2017 as a whole we have edged our Provinces forecast down a little, but we still forecast further RevPAR growth of 2.5 per cent.

“Our 2018 forecast is marginally stronger than expected in March, and we now anticipate a further 2.3 per cent RevPAR growth.”

The report also reveals that terrorist attacks in London and Manchester appear to have had a limited impact on visitation levels and that cyber-attacks also have the ability to disrupt hotel trading.

Finally, hotels also report that the cost of labour has been pushed up as it becomes harder to fill vacant positions.

The report said: “The Brexit vote has prompted some workers from other EU countries to leave already or consider going, partly because of uncertainty around the UK’s economic outlook and because any money those workers earn in pounds is now worth less in euros for them to send home.”

To read the full report visit:

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