Weak pound drives growth but pushes up costs

British hotels will see a slower rate of growth in 2018 as the exchange rate has less of an impact on inbound travel, according to PwC’s latest UK hotels forecast.

The weak pound is making costs for hoteliers rise, and many hotels are already seeing overseas staff depart following the Brexit vote, warned the report.

The outlook for London remains highly positive, with an average daily rate (ADR) of £145 this year – up 3.6% on 2016. Next year it will rise 2.2% to £148.

A further 19,000 rooms are to be added across the UK in 2018, of which 7,000 are expected to open in London.

Other cities with large pipelines for 2018 include Manchester, Belfast, Glasgow, Edinburgh, Liverpool and Bath.

Liz Hall, head of hospitality and leisure research at PwC, said: “The weak pound has encouraged record numbers of international leisure tourists to visit London in 2017 and our analysis shows many other cities have also benefitted.

“The terror attacks in London and Manchester appear to have had limited impact on visitor numbers, meaning hotels have performed strongly so far this year.”

However, she added: “Next year, hotels are facing a number of challenges which could restrain growth.

“While the pound is bringing leisure tourists in, it is also creating a harsher environment for hoteliers as they have to contend with rising costs and squeezed margins with the weak pound pushing up the cost of imported goods.

“There are also labour issues. The Brexit vote has prompted some workers from EU countries to leave their jobs and some hotels are struggling to fill these vacancies and facing higher costs when they do so.”

Beyond London, cities that performed particularly well include Cardiff, thanks to hosting this year’s Champions League Final in June.

Hull saw a 13% lift in occupancy rates after being awarded the City of Culture status in 2017, while Edinburgh and Belfast have seen ADR gains of 15% and 13%.

Pictured: Porters at the Celtic Manor Resort, Newport. ©VisitBritain/Rod Edwards.

pwc.co.uk/hotelsforecast