Rising airfares push UK holidaymakers towards summer staycations
Key Points
- London hotel occupancy fell from 78.9% to 77.4% year-on-year in April, while UK-wide occupancy rose to 76.2%.
- RSM UK links London's decline to overseas tourists cancelling trips amid Middle East tensions and rising airfares.
- 31% of UK consumers have changed travel plans; 27% do not plan a holiday in the next 12 months, up from 19%.
- RSM UK chief economist Thomas Pugh says the energy price cap rises 13% next month, pushing inflation to 3.5%.
- Hotels are expected to hold up over summer, with UK staycations tipped as the preferred option for many.
London hotel occupancy fell year-on-year in April while demand across the rest of the UK rose, the latest RSM UK Hotel Tracker shows.
The data, compiled by Hotstats and analysed by RSM UK, shows London occupancy dropped from 78.9% to 77.4% in April year-on-year, while UK-wide occupancy edged up from 75.7% to 76.2% over the same period.
Average daily rates for occupied rooms in London rose from £199.95 to £202.29, and across the UK from £137.77 to £140.24.
Revenue per available room dipped in London from £157.68 to £156.60 but rose across the UK from £104.36 to £106.88. Gross operating profits in London fell from 34.1% to 32.5%, while UK profits stayed relatively flat at 29.6%.
Chris Tate, Partner and Head of Hotels, Travel and Tourism at RSM UK, attributed London’s decline to overseas tourists delaying or cancelling trips.
“As nervousness around the Iran war drags on, so does the hit to London’s hotel market with some overseas tourists delaying or cancelling their trips to avoid potential travel disruptions,” Tate said.
He added that demand across the rest of the UK was holding up as domestic travellers opted for lower-risk options closer to home.
Tate said the conflict in the Middle East, combined with a rise in airfares, had dented consumer confidence. He pointed to figures showing 31% of UK consumers had changed their travel plans by cancelling, postponing or changing destinations.
A further 27% of consumers do not plan to take a holiday in the next 12 months, up from 19% before the conflict.
Tate said the May heatwave, particularly over half term, should have boosted the hotel market, and that consumers were favouring last-minute bookings over advance planning.
“Provided the hot weather continues over the summer, UK staycations may be the preferred holiday option for many,” he said. He cautioned that domestic demand alone was unlikely to offset the loss of overseas visitors.
Thomas Pugh, Chief Economist at RSM UK, said 2026 would be a tougher year for consumer-facing firms. He said fuel prices had already surged and that Ofgem had confirmed the energy price cap would rise 13% the following month, pushing inflation back to 3.5%.
Pugh said pay growth was slowing, particularly in the private sector, leaving real wages to stagnate in the latter half of the year.
However, Pugh also noted that consumer confidence had held up better than expected and that households had entered the period with a high savings ratio, giving them scope to offset the hit to real incomes by saving less.
He warned that the longer the crisis continued, the more likely consumers were to cut back on discretionary spending.
On the outlook for hotels, Pugh said the sector should still hold up over the summer months. He said inflation was unlikely to peak until the fourth quarter, and that it took roughly nine months for a rise in jet fuel to materially push up airfares, as most airlines hedge against oil prices and tickets are usually booked well in advance.
