RevPAR in London’s hotels rose 6% in Q2 2019 on the back of visitors travelling to the capital to watch the ICC Cricket World Cup and the Major League Baseball.

On the back of both major sporting fixtures, London’s hotels saw average rates rise 5.6% to £157 year-on-year, with occupancy up 0.6% to 84%.

It was a different story in the regions, however, despite a number of the cricket fixtures being held in Birmingham, Manchester and Southampton. Outside the capital, RevPAR was down by 0.9% for the quarter, average rate fell 0.6% to £73 compared with the previous year, and occupancy was down 0.3%, This was the second consecutive quarter that RevPAR has decreased in hotels outside London.

‘Unfortunately, these fixtures were not enough to boost occupancy sufficiently in hotels outside London. The combination of top line retraction, cost pressures and continuing new supply is still putting significant pressure on regional hotel margins,’ commented HVS London chairman Russell Kett.

The pipeline for new hotels in London currently stands at 10% as a percentage of supply, with a 6% active pipeline for the regions.

‘With revenue declining, costs increasing and a strong active pipeline, operators are likely to struggle to increase profitability, particularly in locations outside the main tourist hubs, and those not benefitting from robust corporate activity,’ he added.

While slower than in Q1, transaction activity in London remained strong in Q2, with £2.1bn-worth of deals completed in the 12 months to Q2 2019, up 54% on the previous year. This was boosted by the sale of the Grange portfolio in Q1 for £1bn, and the 163-room Crowne Plaza Kensington in Q2 for £84 million.

The regions saw some £2.9bn-worth of transactions, down 15% year-on-year.

‘The transaction market is still somewhat suppressed owing to Brexit-related deal reticence, with transactions either being put on hold or with some taking longer to complete,’ said Kett.

‘Assuming Brexit is completed in October, we should see more UK transactions being completed as some of the uncertainty is removed and confidence begins to be restored.’

You can download a copy of UK Hotel Market Tracker: Q2 2019 here.

The latest UK Hotel Market Tracker: Q2 2019 is produced by HVS London, AlixPartners and STR.