Birmingham’s hotel sector shows growth but 2019 will be challenging

Birmingham

Birmingham’s hotel sector is showing growth as it prepares to welcome a boost in tourism numbers ahead of the region hosting Coventry City of Culture 2021 and Commonwealth Games 2022.

Birmingham has seen one the UK’s highest increases in Revenue Per Available Room (RevPAR) of 5%, only behind other major tourist destinations, such as Brighton, Gatwick and Liverpool, according to PwC’s latest UK Hotels Forecast Update.

The city remains an affordable destination with the average room rate at £70.38, compared to more expensive cities such as York, Brighton and Bristol. Whilst the number of rooms available in the city stayed the same, the occupancy rate saw an increase of 2% from December 2017 to December 2018.

The report shows that in terms of the key performance measurement metric, RevPAR, Birmingham has seen one of the greatest increases of 5%, however it remains below the UK regional average at £53.68, compared to £55.46.

As the city prepares to welcome heightened visitor numbers with major sporting and cultural events in the calendar, and the West Midlands continues to be one of the UK’s most popular destination for conferences, meetings and events.

In 2017, the number of visitors to family attractions and galleries in the West Midlands has risen by 2.5% and 3.4% compared to 2016. According to the West Midlands Growth Company, Birmingham welcomed 41.8 million visitors in 2017, a 6.9% increase from 2016 and generating £7.1 billion worth of economic benefit.

Matthew Hammond, PwC’s Birmingham office Senior Partner, said:

“Birmingham and the West Midlands continue to perform well in the hotel sector, which is testament to the region’s cultural heritage, high quality tourist and business destinations, and national and international connectivity.


“As we prepare to put the West Midlands on the global stage through Coventry City of Culture 2021 and the Commonwealth Games 2022, we are seeing an unprecedented period of change and investment in the region, which will result in a growth in visitor numbers. This, combined with the arrival of major employers in Birmingham such as HSBC and our own commitment at One Chamberlain Square at Paradise, along with investment in infrastructure such as HS2, Metro and 5G, will also help increase footfall and wider economic benefits to the leisure and tourism sector.”  

Nicola Hewitt, Commercial Director at West Midlands Growth Company, said:

“As confidence in the West Midlands increases, it is encouraging to see the region’s popularity reflected in the steady growth of its accommodation sector, with a further 80 hotels also currently in the development pipeline.


“The West Midlands is now very much in the spotlight as a thriving global location for tourism and major events, so it’s imperative that we continue to capitalise on this sector’s potential, benefiting our region’s hoteliers and attractions.”

The PwC forecast for the year ahead is for modest RevPAR advances right across the UK regions. This is set against a backdrop of continuing global, European and UK political and economic uncertainty that are likely to slow global economic growth this year.

Matthew continued:

“Whilst the impact of Brexit on potential travellers to the UK – particularly from across Europe – means many are adopting a ‘wait and see’ attitude, the continued proactive response from the business community to engage with tourism leaders on strategic campaigns could play an important role in helping to combat challenges facing the sector.”

The UK outlook

Average Daily Rate (ADR) is forecast to continue to see growth with an uplift of 1.4% for the next two years taking ADR up £2 to £151 in 2019 and £153[1]  in 2020. Gains in ADR will drive Revenue per available room (RevPAR) growth by 1.7% in 2019, taking RevPAR to £126. In 2020, growth is anticipated to see a further  1.4% rise, taking RevPAR to £128.

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