Alarming news items, such as the recent floods in Cumbria, may have raised concerns about UK hotel occupancy, but it seems the outlook is generally positive for the UK's hospitality industry in 2016. Respected sources such as PWC have predicted growth, albeit not huge growth, for the year ahead. The year-on-year forecast for room occupancy growth was forecast to be 1.6% in 2015 but only 0.6% in 2016. This means 2015 occupancy was 76% and rose to 77% in 2016, if growth continues as predicted. However, the hospitality industry is vulnerable to external pressure such as geopolitical events. It's unclear what events may arise that could impact on the travel, tourism and hospitality sectors over the next 12 months.
There are certainly downward pressures on the hospitality industry which will suppress growth prospects. The pound is relatively strong, meaning visitors from countries such as India will find it less favourable as a destination. In addition, there are no major sporting events or royal pageantry set to take place in 2016. Instead, the world's attention will focus on Rio for the Brazil-based Olympics this summer. Nevertheless, there are smaller events of interest, such as the anniversary of Shakespeare's death, which will focus attention on Stratford upon Avon.
Despite the adverse currency effects and lack of major events to draw in visitors from abroad, it's thought that there'll be over a million more visitors to the UK from overseas in 2016 compared to 2015. According to Visit Britain, 36.7 million overseas visitors will come to the UK this year, compared to 35.4m in 2015 (source: http://www.bighospitality.co.uk/Trends-Reports/Overseas-visitors-forecast-to-spend-23bn-in-UK-in-2016 ). This 3.8% rise in tourist numbers is predicted to correspond to a rise in tourist spending of 4.3%.
According to PWC, we're already seeing London occupancy rates at their highest for a decade and the UK overall is at a record high.
Many cities continue to see double digit growth in their RevPAR (revenue per available room) figures, including Bristol, Birmingham, Liverpool, and Southampton. However, some regions may not manage to achieve the same growth. Areas affected by flooding over the last few months may be impacted, both by the immediate practicalities of the infrastructure recovery and by negative publicity caused by misconceptions about the impact of flooding.
Shocking images of damaged bridges and buildings washed into rivers in the north of England are likely to cause a lasting negative impact, which could adversely affect the hospitality industry. There have been some efforts to overcome this: for example Cumbria Tourism has embarked on a campaign to assure people the area is back in business.
The UK tourism and hospitality industry remains sensitive to wider geopolitical trends. The recent terrorist attacks in Paris are thought to have had a negative effect on travel to the wider European region, as travellers avoid Western Europe. The Telegraph suggests the Paris incidents could wipe over £600m off the value of European tourism. Although the forecast is generally positive, it remains to be seen whether further newsworthy incidents, such as adverse weather or instability, may negatively impact the anticipated growth trend.