Positive 2013 Supply and Demand Forecast for London and Regional UK

STR Global, in conjunction with Tourism Economics, is forecasting positive supply and demand growth across London and regional U.K. in 2013.

Supply in London hotels is projected to increase by 3.5%, while demand will grow by 2.9%. The excess supply is forecasted to lead to an occupancy decrease of -0.5% in 2013. RevPAR is expected to decline by -1.6%, primarily driven by a decrease in ADR of -1.1% to £139.13.

"RevPAR is predicted to increase in June and July, driven by a surge in occupancy from the return of the regular summer guests," said Elizabeth Randall Winkle, managing director of STR Global. "However, this will be offset by a drastic decline in ADR the following month, resulting from the 2012 Olympic Games being hosted in London during August of last year. Unfortunately, the continuing economic uncertainty across Europe makes forecasting a challenging task and subject to change."

In London, across the hotel class segments, Upper Midscale hotels are the only segment expected to see an increase in occupancy and RevPAR. The 0.4% increase in RevPAR is because the Upper Midscale segment is the only segment where demand is forecast to outpace supply. It is also the only segment in which occupancy is expected to exceed 80%.

In 2013, supply across regional U.K. is forecast to grow 1.4%, exceeding demand growth of 0.6% and leading to an occupancy decrease of -0.8%. The decline in occupancy will be moderated by a 1.7% increase in ADR, resulting in a 0.9% increase in RevPAR to £41.54.

Across the U.K., monthly RevPAR%age changes from the previous year are projected to range between -7.4% and 8.9% in Birmingham, with percentage ranges in Edinburgh (-6.2% to +8.2%), Gatwick (-2.0% to +13.3%), Glasgow (-4.5% to +12.1%), Heathrow (-7.1% to +12.3%), Leeds (-2.5% to +9.5%) and Manchester (-7.0% to +9.4%) illustrating similar patterns.