London hotel market GOPPAR surges in May

With a significant influx of overseas travelers flying into London in May, partly due to the historic event of the King’s Coronation, London’s hotels recorded an impressive performance during the month.

London’s GOPPAR climbed in May, with a month-on-month gain of 27% and profits up 26% against May 2019, according to Knight Frank’s latest study. This robust performance helped recover the negative YTD performance, with May YTD GOPPAR now on par with 2019 and a positive trajectory for the coming months.

Passenger arrivals at Heathrow Airport from North America and the Middle East surpassed 2019 levels in May, with U.S. arrivals up 12% month-on-month.

Occupancy for London hotels touched 79% in May, which was on par with 2019, following a rise of 8.6 percentage points compared to May 2022. Along with the double-digit growth in ADR, RevPAR jumped 28% from May 2022.

Occupancy for London hotels touched 79% in May.

RevPAR was 50% as of May YTD compared to the same period in 2022.

Month-on-month GOPPAR was similarly strong for hotels in the regional U.K., with GOPPAR up 35% in April but more modest growth of 12% compared to May 2022 to £38 PAR.

On a YTD basis, GOPPAR among regional hotels was 1.5% below 2019 levels but is predicted to equal 2019 levels in the coming months.

Occupancy in regional hotels touched 74.5% in May, up two percentage points from May 2022. It was, however, down by 5.9 basis points compared to 2019 performance.

Robust ADR growth lifted RevPAR by 15%, while YTD RevPAR was up 20% compared to 2022.

There was a monthly growth of ADR in London (14%) and regional U.K. (11%) compared to May 2022, which meant that hoteliers continued to hike prices above inflation. Total departmental operating costs were up 7.1% in London and 6.4% POR in the regional U.K. in the same period.

Utility costs surged 48% in London and 22% in regional U.K. over the last 12 months. Even with the decline in wholesale prices and reduced hotel consumption during spring, hotels across London registered a 12% reduction in POR in May compared to January. Regional U.K. hotels saw a 24% dip in POR in the same period.

In May, total payroll costs increased by 1.5% PAR in London but fell 1.2% in regional U.K. It declined 3.2% in the top 12 regional cities. YOY, total payroll costs PAR in London rose by 20% compared to May 2022 and by 10% in regional U.K.