UK hotel room prices set to increase
Key Points
- Hotel rates are rising faster than occupancy, so higher prices are not coming from a rush of demand
- IHG's UK hotels earned 3.1% more per available room in the second quarter
- Across IHG globally, average daily rate rose 2.5% while occupancy added just 1 percentage point
- Almost all of IHG's UK growth comes from rebranding existing hotels rather than building new ones
- New hotel supply is growing fastest in China and emerging markets, not developed ones
Hotel prices in the UK are climbing on rate rather than demand, and there is little sign of new rooms being added to ease capacity constraints.
IHG Hotels & Resorts reported in its half-year results on Tuesday (11 August) that its UK hotels earned 3.1% more per available room in the second quarter.
Across the group globally, the average daily rate rose 2.5% in the first half while occupancy added one percentage point. This means that most of the increase came from what guests paid rather than how many rooms sold.
Rooms revenue growth across IHG’s Europe, Middle East, Asia and Africa region was led by group bookings, up 4% year on year, with business travel up 2% and leisure up 1%.
UK rates grew 3.1% in the second quarter, ahead of Continental Europe at 2.3%.
IHG’s UK estate reached 378 hotels, up 4.1% year on year, growth the company said came largely from conversions – existing hotels changing their sign to an IHG brand. A conversion adds no rooms to the market.
Global hotel room supply grew at an average of 2.3% a year over the decade to 2025. IHG expects new supply growth to stay concentrated in emerging markets and Greater China, where its own estate grew 11.7% year on year against 1.4% in the United States.
The company opened a record 31,500 rooms across 197 hotels worldwide in the first half and signed a further 352 hotels, taking its global pipeline to 2,385 properties.
Roughly half of that pipeline is under construction, and around 43% of openings in the half were conversions rather than new builds.
