EDINBURGH has led the UK’s New Year’s Eve surge in hotel room revenues, increasing RevPAR by 12% over the previous year, followed by London, which increased RevPAR by 9% compared to NYE 2023.
Scotland’s capitol continued its outperformance to rival London as the year ended. Hotels in the Scottish capital experienced the highest year-over-year RevPAR growth across the major UK markets as it grew by approximately 12%, as rates reached £284, and occupancies hit 92%. Its growing international reputation coupled with the city’s appeal to domestic visitors continue to support local hotels, while regulation around short-term lets may be positively impacting hotels too, especially during compression nights.
Meanwhile London RevPAR was only slightly behind Edinburgh in absolute terms, while revenues saw a 9% uplift over the previous year. Occupancy levels followed a similar trend reaching 90% while rates experienced moderate growth, a trend that has been taking shape since the second half of 2023.
But not all cities have been as successful on the last day of the year. Regional domestic destinations, including those that have seen above-average supply growth in recent years, may have been adversely affected. This suggests that leisure consumers might be more price conscious given the cost-of-living squeeze. Meanwhile, hoteliers strive to strike a balance between occupancy and ADR growth amid increased competition.
Six of the major cities experienced RevPAR declines on an annual basis, largely due to losses in pricing. Birmingham, Newcastle, and Manchester stand out as the underperformers as RevPAR across these locations experienced a drop of over 10%. Although Liverpool hotels did not feel as much of a hit, average rates declined by 7% during New Year’s Eve with some losses being slightly offset by occupancy gains.
The outlook for UK hotels for 2024 looks broadly positive. The divide between international cities like Edinburgh and London may become more prominent, however, as these destinations benefit from greater international visitation. Regional cities largely reliant on domestic demand, especially leisure-led business, could face challenges in driving average rates should consumers become more price sensitive and selective over their experiences. Above-average supply growth in locations such as Glasgow and Liverpool further pose supply-side risks that could affect performance in the year ahead.
