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We provide a detailed overview of key performance indicators for both London & Regional UK, summarising trends in revenues, expenses, and profitability. In this month鈥檚 edition we spotlight on the performance of London鈥檚 Luxury Hotel Market and Regional UK鈥檚 Golf & Spa Hotels.

Key Headlines:

• London hotels achieved occupancy of 82% in June, a rise of 3.2 percentage points versus June-2022. But with robust seasonal demand and persistent high inflation, many hotel operators continue to pursue a strategy of rate maximisation in lieu of full occupancy recovery, recording 8.5% ADR growth in June.

• London鈥檚 Upper-Midscale and Upscale hotels outperformed the market with a 21-percentage point uplift in H1-2023 occupancy, to 77% and 15% growth in ADR, resulting in a 57% uplift in RevPAR. This impressive performance has led to a 62% rise in the departmental operating income PAR over this same period.

• London鈥檚 Select Service Hotels achieved its highest occupancy performance since July 2019 at over 87%.

• London鈥檚 Luxury hotels prove they are London鈥檚 strongest positioned hotel class as a hedge against inflation, recording 10% real ADR growth for H1-2023, versus 2019 prices.

• London鈥檚 Heathrow Airport recorded a 5.2% month-on-month uplift in overseas visitor arrivals, boosted by a 13.5% rise in passengers from Asia/ Pacific and US arrivals up 4.3%. Total overseas passenger arrivals of 6.68 million remained 1.9% below June-19.

• Regional UK hotels achieved occupancy of 81% in June, a four-percentage point uplift on June-2022, but with the occupancy margin narrowing to 2.8 basis points versus 2019. Combined with continued strong ADR growth, this led to 13% RevPAR growth versus June-22, whilst H1-2023 RevPAR is up 19% versus H1-2022.

• Regional UK鈥檚 Select Service Hotels outperformed the regional UK market in H1-2023, with an uplift of 26% in RevPAR versus H1-2022. This was achieved through a 10-percentage point hike in occupancy and 10% uplift in ADR. With Select Service hotels recording a 46% surge in its ADR for H1-2023 when compared to H1-2019, this equates to real ADR growth of 16%.

• Utility costs increased by 41% in London and by 25% across regional UK in the 12 months to June, equivalent of 3.6% and 5.3% of total revenue respectively. But, with prices and consumption falling, London hotels recorded a 14% reduction PAR in June versus January 2023, whilst Regional UK hotels have seen a 34% reduction PAR over the same period.

• Total payroll costs in London remained static in June versus the previous month, whilst a 4.7% increase was recorded across Regional UK. Year-on-year, total payroll costs PAR in London have increased by 15% versus June-2022 and by 10% in regional UK.

• Despite rising costs, the strong revenue growth has seen resilience in terms of departmental operating income, with London recording H1-2023 growth of 37% versus H1-2022 and regional UK seeing 17% growth over the same period. Both London and Regional UK are recording departmental operating income ahead of H1-2019, up by 7% and 12% respectively.

• For the second consecutive month, boosted by improving seasonal demand, both London and Regional UK have achieved strong GOPPAR growth. For H1-2023 London has seen GOPPAR growth of 42% versus H1-2022, whilst regional UK has recorded 16% GOPPAR growth over the same period.

• Both London and Regional UK have made a full recovery in GOPPAR versus H1-2019, with London 2% ahead and regional UK 3% above. London achieved H1-2023 GOPPAR of £82, whilst regional UK secured a GOPP of £29 PAR. The top 12 regional city destinations in terms of RevPAR performance, have yet to make a full recovery though, with H1-2023 GOPPAR lagging by 9% versus 2019.