The impact of the increase in the National Living Wage (NLW) on labour costs in 2024 is forecast to hit UK hotels, particularly in the regions. This will put the spotlight once again on the need for top line growth and smarter cost control to maintain or improve profitability.
The rate of growth in occupancy, average daily rate and revenue per available room, while strong, continued to decelerate as the market moves on a path towards stabilization. Lower-priced hotels benefited from the customer's level of rate fatigue being felt in the market, with ADR growth levels for midscale properties triple that of higher-priced hotels in Q4. 2023 RevPAR experienced a year-over-year increase of 16.5 percent, with Q3 seeing an increase of 13.6 percent and Q4 being up 11.5 percent.
Room rate growth had played a significant role in the initial recovery for US hotels but softened significantly in Q2 before falling to below inflationary growth levels in Q3. That said, ADR growth is expected to begin to increase and slightly exceed a declining inflation level beginning in Q4 and into next year.
Only 17% of executives strongly agree that there will be a recession in the next six months - As executives see external risks ease, they are channeling their investments into transformation, technology and talent
The rate of growth in occupancy, average daily rate and revenue per available room decelerated considerably in Q2, with room rate fatigue effecting growth in the higher-priced hotel categories.
After a stronger-than-forecast performance for 2022, continued inflationary headwinds across energy, food and beverages (F&B) and payroll remain critical factors impairing the UK hotel industry’s recovery.
US Hospitality Directions May 2023