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London occupancy set to be highest in Europe in 2018, says PwC

06/06/2018
London’s hotel occupancy is set to be the highest in Europe in 2018, according to the 7th edition of PwC’s European cities hotel forecast.

London is set to see occupancy levels of 82 per cent this year, despite a supply spike and a slowdown in growth thanks to the fizzling out of the weak pound effect, the report found.

At €162 (£142), the UK capital is also set to have the fourth highest average room rates in Europe in 2018, behind Geneva (€242/£212), Paris (€236/£207) and Zurich (€197/£173).

The research also found that Porto, Amsterdam, Lisbon and Prague are best placed for growth in 2018 - and Paris is expected to make a strong comeback in 2019.

David Trunkfield. head of hospitality and leisure at PwC UK, said: “In 2018, Porto leads the growth pack with over 10 per cent RevPAR (revenue per available room) growth anticipated; Amsterdam, Lisbon and Prague could see around 7 per cent RevPAR growth and further robust gains are expected in Milan and Paris. Geneva and Rome are also forecast to see some moderate growth.

“But the pace of growth is expected to slow in London in 2018, as the weak pound effect fizzles out and a supply spike dampens occupancy. Paris has shown sustained recovery and shares the top spot on the growth chart in 2019 with Lisbon, with around 6.5 per cent RevPAR growth expected for both cities.

The report addresses the role online travel agencies (OTAs) have to play in selling rooms.

Liz Hall, head of hospitality and leisure research, at PwC UK, said: “Revenues may be rising but simultaneously hotels face rising cost pressures to sell rooms. One area where hotels have to spend more is acquiring customers through online travel agencies and other intermediaries - this continues to push up commission fees and challenge hotels.”

The report also looks at the threat of over-tourism, saying that increasing international demand for key destinations needs to be carefully managed.

Trunkfield added: “An approach to controlled growth should include formulating a clear destination strategy, including a clear positioning, as a basis for government action and the provision of private services. This could include city planning and zoning, hotel development regulation, centralised product offering planning, infrastructure planning, and so on.”