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March 1, 2015

London to witness highest occupancy rates for 20 years, says PwC

PricewaterhouseCoopers’ (PwC) latest European hotel forecast has revealed that London, as a growing economy, is in the midst of a hotel boom and is expected to witness the highest occupancy rates for 20 years.

By Srivani Venna

PricewaterhouseCoopers’ (PwC) latest European hotel forecast has revealed that London, as a growing economy, is in the midst of a hotel boom and is expected to witness the highest occupancy rates for 20 years.

According to PwC, revenue per available room (RevPAR) growth of London pegged at 4.6% and 4.7%, respectively in 2015 and 2016, is expected to boost RevPAR to £122 in 2015 and £127 in 2016.

In 2015, growth is set to be driven by occupancy growth of 1.6% taking occupancy to 84%. In 2016, RevPAR growth is expected to be driven almost completely by 4.4% average daily rate (ADR) growth, taking it to £151.

Growth is estimated at around 4.5% in London and 2% in other cities which include Manchester, Edinburgh, Birmingham, Aberdeen, Glasgow, Newcastle, Liverpool, Cambridge and Bath.

"We are optimistic in the sector’s ability to compete, adapt and succeed; especially now economic fundamentals of rising prosperity and increased globalisation have re-asserted themselves following the financial crisis."

In 2015, an additional 6,430 rooms could open in London taking the hotel rooms supply total to almost 136,000 rooms.

PwC head of hospitality and leisure research Liz Hall said: "The hotel sector faces plenty of challenges and geopolitical uncertainties.

"But we are optimistic in its ability to compete, adapt and succeed; especially now economic fundamentals of rising prosperity and increased globalisation have re-asserted themselves following the financial crisis."

Compared with 2013, Europe attracted 20 million more international tourists in 2014 and the majority of cities Geneva, Zurich and Moscow included in the forecast are expected to achieve higher growth in 2015.

Dublin (8.8%), followed by Madrid (5.6%) and London (4.6%), then Rome (3.8%), Prague (3.7%), Porto (3.7%), Amsterdam (3.6%), Barcelona (3.5%) and Edinburgh (3.5%) are said to be the top cities which saw growth in RevPAR in local currency in 2015.

During this year, hotels in Geneva and Zurich faced a challenging time with the removal of the Swiss Franc cap, making tourism and hotels expensive.

Dublin (8%) is expected to top the RevPAR growth league in 2016, in local currency, which will be followed by Madrid (4.8%), London (4.7%), Rome (4.4%), Milan (4.1%), Barcelona (3%), Edinburgh (2.7%), Berlin (2.6%) and Porto (2.6%).

Some cities are also expected to gain a boost from events such as the Rugby World Cup and the NFL International series (London); Milan will host EXPO 2015 while Berlin will host the UEFA Champions League final.

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