London hotels performed better than forecast in 2013, according to industry analysts.

PricewaterhouseCoopers (PWC) predicted the sector would return “to normal” in 2014 as the economy improves.

The accountancy firm described the last 12 months as a rollercoaster ride for the capital hoteliers after a slow first quarter and tough year-over-year comparisons with the 2012 Olympics.

Liz Hall, head of hospitality and leisure research, said recent rate growth had come on the back of very high occupancy levels.

“The economy has put the fizz back into the UK hotel sector with a return to confidence and stronger demand. Despite ADR levels still reflecting continuing consumer and corporate price sensitivity, it’s a very positive story. Continued economic recovery should mean sustained and enhanced prospects for hoteliers in 2014.”

Hall said most other UK regions had seen a “remarkable recovery” with continuously strong demand growth.

She admitted the conference and meeting market was still underperforming, but said the economic recovery and calmer euro zone would help stimulate demand and aid a recovery.  

In spite of the optimism, Hall warned the sector not to be complacent about future prospects.

She said she expected consumer spending to remain squeezed until 2015 making the domestic marketplace a challenging one in which to operate.

She added: “The sector keeps evolving and London has continued to soak up all the new supply that has opened through 2012 and 2013 and no doubt it will in 2014 as well, when a further 6,000 rooms and some exciting new brands open.

“In the Regions, while there remain pockets of oversupply with budget chains adding to hoteliers’ pricing pressures, many cities have performed very well.

“But it does mean a more crowded UK hotel landscape.  For the consumer, new supply is progress, with new brands, more choice and more price competition.”


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