STR on Brexit, Supply and Occupancy Decline

24th September 2019

Thomas Emanuel is a Director at STR. Based in London, he leads a team focused on driving business with industry partners. Throughout his time with STR, Thomas has worked extensively with hotels, investors, developers, consultants, banks, governments, destination management companies and many others. Thomas has been a guest lecturer at Ecole hôtelière de Lausanne and participated in the OECD's high-level meetings on tourism policies. Thomas has worked in over 45 countries across 6 continents and regularly speaks at major hospitality conferences. He is frequently interviewed for his insights on the industry by outlets including CNN, Bloomberg, CNBC, and various tourism and hospitality publications. With such an impressive C.V. it felt remiss of us not to put aside some time to catch up with Thomas in advance of our happy gathering next month. Read on dear reader, read on.

1. How is business at STR as we come to the end of Q3 2019?

Business is great. We continue to grow our sample of participating hotels and cement our position as the market leader in hotel performance data. We are now working with more than 65,000 hotels globally, with over 3,950 of those in the United Kingdom. Our AM:PM platform, which tracks existing supply and the hotel pipeline, is fully operational globally and we are providing greater in-depth analysis on supply trends. 

We also continue to launch new products, including Forward STAR, which tracks business on the books, along with our serviced apartment and hostel benchmarking pilots, providing further insight for the revenue management community across multiple accommodation sectors. 

2. Can you highlight some of the key trends that you are seeing in the UK market, and what is driving that performance?

The U.K. has faced a tough 2019 thus far. August year-to-date (YTD) RevPAR is up 0.8% which is being solely driven by average daily rate (ADR) growth (+1.0%), whilst occupancy has declined (-0.2%). 

There are two overriding factors affecting hotel performance across the U.K. – Brexit and supply. 

We believe that the continuing uncertainty over Brexit is negatively influencing the perceptions of international visitors to the U.K., based on a survey of STR’s traveller panel. This, along with muted economic growth, is impacting demand and is being felt by regional markets in particular, who are more dependent on domestic business. 

Supply is also a key factor, particularly across major regional markets. Nationwide, supply has grown 2.5%, but this number is far steeper in Belfast (+15.3%), Edinburgh (+5.9%), Glasgow (+8.3%), Liverpool (+6.2%), and Manchester (+4.6%). All of these markets, with the exception of Manchester, are experiencing occupancy decline, but all five are reporting demand growth; so these declines are supply driven. 

London continues to perform very well, with RevPAR up 4.5% to GBP124.72. The capital is absorbing the new supply and hoteliers are increasing ADR in the face of solid demand growth. 

For Regional U.K. we think that trading conditions will be tough for the remainder of 2019 and 2020, but we will start to improve in 2021, whilst London will continue to enjoy steady growth – almost exclusively from ADR. 

3. STR are working on a new product – Forward STAR – which is now available across a number of markets. What insights can you share with our audience as to what data and information this product will provide? 

STR has traditionally been known for historic data performance, but Forward STAR looks to what is happening in the future. The easiest way to define it is “business on the books benchmarking”. Forward STAR visualises your hotel’s demand build up against your local market and competitors. The tool provides operators with easy-to-digest reports that give a snapshot of both forward occupancy and pick-up on a weekly basis for the next 90 days ahead and on a monthly basis for the next 12 months.

The beauty of this product lies in its simplicity and the ability for properties to adjust their strategy based on real, straightforward and accurate forward booking data. The product is available at both market and competitive set levels with the latter including a detailed events listing report outlining both major and minor drivers for demand in a property’s area. 

Forward STAR is currently available across numerous U.K. markets, such as London, Edinburgh and Manchester with additional international locations such as Dublin, Zurich and Amsterdam also live. Our broader U.K. roll-out is currently underway and other key locations across EMEA are imminent. 

4. Finally, it feels like there has never been a more vital time for the industry to come together to learn, network and be inspired by colleagues, visionaries, disruptors and thought leaders. Why do events, such as The AHC, carry value for businesses such as STR?

Events such as The AHC are vital for STR. The highlight for us is being able to update the industry on what is driving performance, but of course the networking is invaluable too. From a U.K. perspective it is certainly the must-attend event, and my colleagues and I are very much looking forward to a fantastic couple of days in Manchester. 

Thomas will be joining Kate Nicholls, CEO of UKHospitality and Joe Stather, Associate Director, Investment Advisory at CBRE to deliver “Beyond Peak Performance – The Hotel Market Overview” in the opening plenary of this year's AHC taking place on the 9th and 10th October at the Hilton Manchester Deansgate hotel. 

If you have yet to register, we invite you to join Thomas, Kate and Joe, all of us and a merry band of hotel folk from across the UK at The AHC 2019.