Improving consumer confidence and the Eras Tour boosts UK hotel sector in June

30 July 2024

Improving consumer confidence and the Eras Tour drove strong demand of UK hotels in June, providing another boost to profits, according to the RSM Hotels Tracker. 

The data, which is compiled and produced by Hotstats and analysed by RSM UK, shows occupancy of UK hotels was up slightly from 81.4% to 81.9% in June year-on-year, albeit behind pre-pandemic levels of 85.3%. London occupancy increased to 84.8%, overtaking occupancy of 82.6% last year, but was down on 87.6% in 2019.  

Average daily rates (ADR) of occupied rooms in the UK as a whole reached their highest rate on record at £175.91 in June, up from £169.08 the same period last year. London room rates increased to £256.40 in June, compared to £254.16 last year. RevPAR of UK hotels rose from £137.55 to £144.14 in June year-on-year; while London saw an even more significant increase, from £209.89 to £217.54 in the same period.

Gross operating profits (GOP) of UK hotels were up from 42.8% (June 2023) to 44.5% (June 2024), overtaking pre-pandemic GOP of 44.3%. In London, GOP was 50.3% in June, an increase from 48.2% last year but flat on 2019 (50.4%).

Chris Tate, head of hotels and accommodation at RSM UK, said: ‘The hotel sector continues to show its resilience despite the cost pressures faced by the industry. Encouragingly, these costs appear to be easing which should give hoteliers some breathing space. Consumer confidence is slowly making a return and booking a UK trip appears to be top of the priority list, despite the absence of any prolonged sunshine as yet this summer.

‘The hotel industry reaped the benefits of Taylor Swift's Eras Tour in June, most noticeably in Scotland with an uptick in room rates, giving the overall UK economy a boost. We expect to see a similar uptick for London in July, with ‘Swifties’ from all over the world descending on the capital. 

‘With better weather on the horizon and a continued improvement in the economy which should encourage consumers to continue spending, the hotel sector is on track for a strong summer.’ 

Thomas Pugh, economist at RSM UK, added: ‘The strength of accommodation prices takes a lot of the blame for services inflation rising back to 7% after dipping to 4.5% in January.

‘The positive result for the UK hotel sector last month is another piece of evidence suggesting that the strong economic recovery continued in June. Indeed, it appears that improvements in consumer confidence and real disposable incomes are feeding through into stronger demand for hotel rooms. 

‘We expect consumer spending to continue to increase through the second half of this year and in 2025 as real incomes rise, which should further support demand for hotel rooms. However, with inflation in the accommodation sector running at around 7%, compared to 2% inflation overall, price pressures in the industry are clearly still an issue.’