Hotel occupancy in London has fallen for the sixth consecutive quarter, and the UK’s vote to leave the European Union could hit the sector even further, according to a study by HVS, AlixPartners and AM:PM.
HVS chairman Russell Kett said the Brexit decision was having the “double impact of weaker sterling and reducing anticipated economic growth”.
He said that, despite the short-term impact, London would remain a “huge magnet for inbound tourism”.
“The longer-term future of the capital’s hotel sector is still positive, even when taking account of the new hotels in the pipeline and the potential impact of the Brexit implementation causing economic wobbles,” he said.
The study offers cautious optimism that the hotel sector will remain an attractive for global investors interested in the medium to long term.
“However,” it warns, “this is reliant on the UK’s remaining an investor-friendly market post-Brexit.”
Hotel transaction activity is also likely to slow down, Ketts said, as investors assess the outlook of future trading.
He said HVS, over the longer term, was optimistic the UK would remain an “attractive source of investment for global investors”.
Hotel occupancy in the UK capital, as well as major European cities, also continues to be affected by increased global terrorist activity.
The study also said London had seen a decline in the number of US tourists travelling because of the upcoming presidential election.
The impact has been a 2% decline in London’s revenue per room, or RevPAR, compared with the second quarter of last year.
Average room rates fell for the second consecutive quarter.
Kett said currency was making Britain a cheaper destination for overseas visitors while dampening outgoing UK travel.