The UK hotel sector demonstrated resilience in 2024, according to Knight Frank’s UK Hotel Trading Performance Review, recovering closer to pre-pandemic occupancy and profitability levels. Hotels in London and regional cities showed improved performance, with growth coming despite rising operational costs. Leisure spending increased and significant events like citywide conferences and large-scale music tours contributed to the recovery.
In London, the occupancy rate rose to 82%, a 3.4% increase compared to 2023. This growth brought occupancy back to pre-pandemic levels, reaffirming London’s position as a top global destination. Despite over 4,200 new hotel rooms, the average daily rate stayed steady at £228. The upper-upscale segment saw a nearly 5% rise in occupancy, reaching 84%. ADR remained at £239, on par with 2023. The luxury hotel segment also saw a rise in occupancy, reaching 75%, but it still lagged behind pre-pandemic levels. Meanwhile, the ADR for luxury hotels decreased by 3.6%. This drop was mainly due to an increase in room supply, the report stated.
In regional UK cities, the occupancy rate increased to 76%, up from 75% in 2023. While this shows steady growth, it remains slightly below pre-pandemic levels. Regional cities also saw a 2.3% increase in ADR, which reached £105. This price now matches real terms pricing from 2019. The improvement in regional markets was driven by higher leisure spending, increased food and beverage revenue, and the return of conferences and events. As a result, total revenue per available room surpassed revenue per available room. This highlights the strength of the regional recovery.
Profitability in the UK hotel sector remained strong. Hotels in London saw a 5% increase in gross operating profit per available room, a 7% improvement over 2019. Regional hotels achieved a 7% increase in GOPPAR, reaching £38. The GOP margin also improved to 30% of turnover. However, profit levels remained below pre-pandemic figures. Rising operational costs, including higher staff wages and increased National Insurance contributions, contributed to this.
Philippa Goldstein, Senior Surveyor and Head of Hotel Research at Knight Frank, said UK hotels showed resilience in 2024. She attributed this to an increase in international visitors and dynamic pricing strategies. She also noted that hotels still face pressures to improve efficiency and manage rising costs. In 2025, embracing technology will be essential for adapting to market changes and optimizing resources.
Looking ahead, the UK hotel sector remains cautiously optimistic. Despite ongoing challenges, the sector is well-positioned for continued growth. Technology will play a key role in driving operational efficiencies and ensuring long-term success.
