The UK hotel sector rebounded closer to pre-pandemic levels of occupancy and improved profitability in 2024 despite rising costs, according to new research from Knight Frank.

The latest UK Hotel Trading Performance Review finds that the average occupancy rate for London hotels increased to 82% in 2024, up 3.4% year-on-year and in line with pre-pandemic (2019) levels. The average daily rate (ADR) was only marginally down to £228, despite a marked increase in supply, with over c. 4,200 rooms added.

Trading performance varied across hotel segments, with London’s upper-upscale hotels posting almost a five percentage point uplift in average occupancy to reach 84%, whilst its ADR was on par with 2023 at £239. Meanwhile, the luxury segment saw occupancy rise to 75% but still remain significantly below the pre-pandemic level (79%) and ADR decline 3.6% year-on-year as a result of an increase in supply.

Across UK regional cities average occupancy increased to 76%, up from 75% in 2023, maintaining the steady year-on-year growth evident since 2022, but remains two percentage points lower than compared to 2019. In addition, ADR increased 2.3% to £105 for the full year, which on a like-for-like basis, in real terms, is on par with 2019 pricing.

According to Knight Frank’s research, regional hotels saw TRevPAR growth outstrip RevPAR growth for the first time since 2019 due to a strong recovery in leisure, food and beverage spending and a rebound in conferences and events.

The data also shows that profitability largely remained robust. Hotels in London achieved GOPPAR growth of more than 5% in 2024, with its performance now 7% ahead of 2019. At the same time, annual profit conversion improved by one percentage point to 43% of turnover. Meanwhile, across regional cities, annual GOPPAR growth of more than 7% was achieved, to reach over £38, whilst the GOP margin improved by almost one percentage point, to equal 30% of turnover.

Despite this, profit levels remain below 2019 levels, underlining the cost pressures that operators are facing. This is set to be exacerbated by further increases to staff costs due to changes to the National Minimum Wage and employers’ National Insurance contribution.

UK hotel performance has been resilient in 2024, partly due to an increase in international visitors, major music concerts such as Taylor Swift’s The Eras tour and citywide conferences. Furthermore, advancements in digital insights and dynamic pricing strategies have enabled hotels to maximise revenue growth at peak times. However, hotels face constant pressure to boost efficiency, cut operational costs and exceed guest expectations and in 2025 optimising resources will become more crucial than ever. Understanding the role that technology can play will be crucial in driving efficiencies and streamlining operations. We believe the UK hotel sector is well positioned to face these challenges, whilst maintaining the momentum of ongoing growth. Realistic but cautiously optimistic is our stance for 2025. Philippa Goldstein, Senior Surveyor and Head of Hotel Research at Knight Frank

About Knight Frank LLP 

Knight Frank LLP is the leading independent global property consultancy. Headquartered in London, the Knight Frank network has 487 offices across 53 territories and more than 20,000 people. The Group advises clients ranging from individual owners and buyers to major developers, investors, and corporate tenants. For further information about the Firm, please visit www.knightfrank.com.