October proved to be an encouraging month for London’s hospitality sector as hotels recorded a rise in occupancy rates, reaching 84.2%. / Credit: Ceri Breeze via Shutterstock

London’s hotel industry experienced an unexpected rise in occupancy rates during October, defying typical seasonal patterns.

This increase is attributed to mild weather and the October half-term break, which encouraged more travellers to visit the capital.

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Occupancy rates: London vs. UK

According to the RSM Hotels Tracker, London hotel occupancy rose from 83.7% in September to 84.2% in October. In contrast, the UK’s overall occupancy declined from 82.8% to 80.7% during the same period.

Year-on-year comparisons show an increase from 81.1% to 84.2% in London and from 78.9% to 80.7% across the UK.

Average daily rates and profits

Despite the heightened demand, average daily rates (ADR) in London decreased from £218.31 to £213.55 year-on-year, while UK rates dipped slightly from £147.37 to £146.45.

However, gross operating profits (GOP) improved, with London hotels seeing an increase from 42.7% to 43.6%, and UK hotels from 37.6% to 38.1%.

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Industry insights

Chris Tate, head of hotels and accommodation at RSM UK, noted, “London hotels managed to escape the usual drop off in occupancy in October, helped by half-term and relatively mild weather which prompted more people to travel.”

He also highlighted challenges in raising room rates, stating, “Pressure remains on daily room rates, with the sector finding it difficult to increase rates further.”

Tate emphasised the importance of cost management for hoteliers facing rising employment expenses.

Economist Thomas Pugh from RSM UK observed that October’s performance offers optimism for continued consumer spending into the fourth quarter.

“We expect GDP growth to pick up from 0.1% in Q3 to 0.3% in Q4 and then to accelerate in 2025 as an uptick in government spending provides a tailwind, and consumer spending continues to improve. This should help to support demand in the hospitality and accommodation sector,” he predicted.