Industry Update
Performance 3 October 2019

PwC UK Hotels Forecast 2019-2020: Turn disruption into opportunity

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PricewaterhouseCoopers

Our UK Hotels Forecast 2019-2020 has launched today - download your copy. As with previous years, we assess the performance of the hotels sector over the last 12 months and consider future industry trends.

The forecast at a glance
This year, our forecast suggests the hotel industry is at a pivotal point. Looking ahead to 2020, while hotel performance will vary widely by geography, segment and business model, we remain overall more cautious in our outlook.

London
We expect London will hold on to growth for the rest of 2019, buoyed mainly by international tourism as a result of the weak pound. However, with a relentless supply of new rooms, maintaining that growth will get harder in 2020, with occupancy forecast to slip marginally by -0.3%. Our outlook for 2020 sees ADR have a marginal lift of 1.3% and RevPAR growth by 3% and 1% for 2019 and 2020 respectively.

Regions
Overall, it's been a difficult year so far and 2019's trading performance looks like turning out worse in terms of ADR and RevPAR than we anticipated in March 2019. We predict weaker business and leisure confidence and continued high new supply additions. Our outlook for 2020 is a -0.6% decline in occupancy growth, a slight gain in ADR but a drop in RevPAR of -0.3%.

The effect on hotel investments
Protracted Brexit uncertainty, ongoing volatility in economic growth and weakened market sentiment have all contributed to nervousness in the market. UK hotel investment volumes have seen a decline of 35% in H1 2019 to c. £2.6 billion, compared to the higher than average levels in H1 2018.

In our report we look in more detail at what this all means for future deal activity, and analyse an emerging trend for leases across the sector.

New for this year
Global and UK political and economic uncertainty, high industry cost inflation, and increasing difficulties in recruiting and retaining staff means that hoteliers need to adopt tech-enabled solutions, increasing efficiency, reducing processes, managing data and enhancing the customer journey.

To assist with this, we have looked at several areas of increasing interest for hoteliers and investors - guest-centric transformation, cyber security and deals. We explore the disruptions affecting the sector and look at how hoteliers can capitalise on new challenges to create opportunities. We also consider what the future may hold for EU nationals working in the UK hotel industry.

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Contact
Samantha Ward
PwC | UK Hotels Sector Leader
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