UK hotels have seen a significant boost in occupancy rates, driven by the start of the Christmas party season and a recovery in international travel. The latest data shows a rise in both hotel room occupancy and average daily rates, indicating a positive trend for the hospitality industry.
With consumer travel set to continue growing in 2025, the sector faces both opportunities and challenges as it navigates economic pressures and rising costs.
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According to the RSM Hotels Tracker, compiled by Hotstats and analysed by RSM UK, these figures highlight a positive shift for the hospitality industry.
Increased occupancy and rates
In November, UK hotel occupancy rose from 76.6% to 79.1% year-on-year, with London seeing a significant rise from 79.6% to 82.8%.
This increase in demand contributed to an uptick in average daily rates (ADR) for occupied rooms across the UK, which went from £143.71 to £148.46. In London, the ADR climbed from £214.80 to £217.86.
Furthermore, gross operating profits (GOP) for UK hotels improved from 35.2% to 36.6%, with London’s GOP increasing from 41.1% to 42.2%.
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By GlobalDataA positive outlook for 2025
The future of the UK hotel sector looks promising, with RSM UK’s Consumer Outlook revealing that 28% of consumers are planning a long-stay holiday in the UK in 2025, up from 25% last year.
Meanwhile, 33% of consumers intend to go on a weekend getaway within the UK. This trend points to a sustained demand for travel, both domestically and internationally.
Chris Tate, head of hotels and accommodation at RSM UK, commented: “Christmas came early for the UK hotel sector last year, with a year-on-year boost in occupancy levels.
This was partly helped by the start of the festive season and an uptick in airport passenger numbers, suggesting international travel is back in full swing.”
He continued, “Holidays remain a priority for travellers, and this shows no signs of slowing down, with consumers continuing to plan trips in the UK and abroad in 2025.”
Cost pressures and strategic planning
Despite the positive figures, hotel operators face challenges. Room rates have mostly plateaued, and hoteliers are now focusing on boosting occupancy to maintain profitability.
Chris Tate cautioned that the industry must be mindful of cost increases stemming from the Autumn Budget, with further financial pressures expected in April.
“The sector will need to think strategically about how to manage costs,” he said, “This might include increasing the adoption of artificial intelligence to create efficiencies.”
Economist Thomas Pugh at RSM UK noted that the hotel sector’s performance in November is an encouraging sign for the economy, especially following a contraction in September and October.
“Any evidence of increasing room rates is likely to worry the Bank of England, which is already grappling with a trade-off between rising inflation and weak economic growth,” Pugh said.
However, he also pointed to an expected increase in consumer spending, driven by rising real incomes and a shift in saving behaviour.
As the sector prepares for 2025, the outlook remains cautiously optimistic, with increased demand and strategic adjustments helping hoteliers navigate the evolving economic landscape.
