Brexit to Hurt London Hotels as Business Travelers to Stay Homeby
Corporate travel budgets to be cut on economic uncertainty
Most new rooms since London Olympics due to complete in 2017
Finding a hotel room in London will be easier next year because companies, worried U.K. economic growth may slow following the Brexit vote, will cut their travel budgets, according to PricewaterhouseCoopers LLP.
Occupancy rates in 2017 will fall one percentage point to 80 percent, the lowest level in nine years, the consultant said in a report on Wednesday. Revpar, an industry measure of profitability, will decline by 2.8 percent this year and 0.5 percent in 2017.
Hotels in large European cities including London have already been hit by a fall in holidaymakers following a spate of Islamic State-inspired killings in France and Belgium, including the Nov. 13 terrorist attacks in Paris. A drop in business travelers will hurt lodgings because those guests tend to spend proportionally more on accommodation. More than 3.7 million people visited London from overseas for business reasons last year, according to data compiled by the U.K.’s national tourism agency.
“Next year will be another difficult one for the capital’s hotel industry, on top of an already negative 2016,” Liz Hall, PwC’s head of U.K. hospitality and leisure research, said by telephone. “Brexit will compound weaker demand we’ve been seeing since the first of the terrorist attacks in November, and business travel will be affected as companies try to get some clarity on how this will affect their U.K. operations.”
A surge in supply will also affect occupancy in London. About 7,200 new hotel rooms will be offered to guests next year, the highest level since the 2012 Olympic Games, according to Hall. Operators also face competition from Airbnb Inc. The number of rental apartments listed on the website jumped 54 percent in July from a year earlier, according to PwC data.
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