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Hotels helped by Rugby World Cup as industry tackles growth of Airbnb

3 min read

25 September 2015

The rise of the shared economy is putting pressure on hotel revenues, with platforms including Airbnb, HouseTrip and onefinestay set to slow 2016 progress.

London hoteliers are starting to feel pressure from the shared economy, including new firms such as accommodation platform Airbnb.

According to new PwC analysis, London hoteliers saw a record 2014 – but have experienced mixed growth so far this year. Despite predicting London will see occupancy growth of one per cent this year, boosted by the Rugby World Cup, 2016 is tipped to rise by just 0.3 per cent.

PwC said demand for trips to London was still strong, but the falling euro had put off some European travellers.

The professional services firm also suggested another factor could be the rise of shared accommodation platforms for both business and leisure, with more travellers being aware of brands and the opportunities of experiencing staying in the shared space.

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Liz Hall, head of hospitality and leisure research at PwC, said: “In London, the number of Airbnb listings are increasing and this trend is likely to continue and cause localised issues for hotels, around pricing pressure and/or underutilisation, especially for undifferentiated products. Such an impact is likely to be felt more strongly by hotels in a downturn. 

“Looking ahead, it will be interesting to see how much of a threat sharing economy platforms pose to hotels and if shared platforms will take the ‘cream off the milk’ at the times of peak demand. Like the branded budget hotels 30 years ago, will rental sites create a new stream of demand for destinations and allow hotels to capitalise on a new type of customer.”

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PwC said the regions have experienced a very good-year-to-date. Around the country, most cities have continued to see very strong revenues per room growth. It said many cities continue to see double digit revenues growth, including Belfast, Bristol, Birmingham, Coventry, Liverpool, Nottingham, Plymouth and Southampton.

Again some of these cities are likely to receive another boost from the national spread of the Rugby World Cup.

David Trunkfield, hospitality and leisure leader at PwC, added: “UK hotels continue to benefit from the improving economic and travel backdrop. So far this year, the pace of growth has been variable in London but dynamic in the regions, driving a bumper year in the investment market. Hoteliers still faces plenty of challenges and geopolitical uncertainty. 

“New products and business models can sometimes represent a challenge for existing businesses. Every so often a new trend has the potential to change the established way of doing business and can leave some businesses ill prepared for the new order.”