PWC has released its predictions for the progress of the hotel industry as we transition from 2017 into 2018. The overall outlook is positive. There is no getting away from the fact that shock factors such as terrorist incidents have had a dampening effect on the leisure industry as a whole. The UK economy is continuing to grow, but at a slower rate, which is putting pressure on business and restricting their spending on corporate travel. That being said, the overall message is that the knock-on effect of these factors has been much less damaging than would have been expected. The outlook for 2018 is, therefore, a positive one.
The overall figures for inbound tourism were up consistently over the different intervals measured from the last 2 years. Inbound travel for holidays, visiting relatives and miscellaneous purposes have all seen steady growth. Business travel, on the other hand, has seen a consistent fall in demand since last year.
2017 was predicted to be the ‘year of the staycation’, with poor economic growth expected to increase the number of British nationals who choose to stay in the UK rather than holiday abroad. There is no data to suggest that this boom ever occurred, and no expectation for this to be the case in 2018. It seems that Britons are committed to the idea of the holiday abroad and this is unlikely to change next year. Hotels are therefore not likely to see an increase in demand due to national tourism over the next year.
The number of tourists coming to the UK on holiday has increased in 2017, largely due to the weakening of the pound following the Brexit vote. The UK has become a more affordable holiday destination for Americans and Europeans in particular as the exchange rate has begun to favour the dollar and the euro over the pound. PWC has written that they expect the pound to stay relatively weak into 2018, but that this is unlikely to increase the rate of growth above what has already been demonstrated in 2017. Hotels can, therefore, expect a steady influx of foreign tourists looking for a good deal, but the number of these tourists is unlikely to be much higher than 2017’s figures.
The Global Business Travel Association has published documents predicting a significant rise in the demand for business travel to and from the UK next year. Businesses are expected to be investing more money into travel, despite the poor performance of the corporate travel market this year. However, there are uncertainties in this market, so forecasts are to be taken with a pinch of salt. The renegotiation of trade deals following the United Kingdom’s decision to leave the EU could have a significant impact, as could threats of further terrorist activity, the exchange rate, travel bans and unstable political climates.
The take-away message is that, overall, PWC think that the hotel sector will see growth in 2018, but they expect the growth to be at a slower rate than has been seen in 2017. The corporate and business travel market is expected to grow at a faster rate than the leisure travel market, although both are expected to have a good year in 2018.