London ranks the lowest in our Recovery Index, owing its position to a strong reliance on both international tourism (c.60%) and the MICE sector, as well as having one of the lowest proportions of budget hotel room stock (approximately 50%) when compared with other markets. London is one of the world’s leading tourism destinations for international travellers, playing host to major year-round events including Wimbledon Tennis, London Fashion Week, Chelsea Flower show and the bi-annual Farnborough Air Show. The capital city also holds an extensive range of conferences and exhibitions, with London ExCeL alone hosting 400 events in 2019 with over 4 million delegates. These venues and events have historically been key demand generators for London’s hotels, however, will not contribute to room night demand in the near future due to the global travel restrictions and rules against large gatherings, quite apart from the fact that ExCel is now the Nightingale Hospital. Another reason why London is likely to recover at a slower rate than other destinations in the UK is its source markets, with American travellers representing the highest proportion of inbound tourism (approximately 14% in 2018). With long-haul flights expected to be the last to resume normal operation, this will further delay London in welcoming tourists from the USA. London is also a global financial hub, generating a healthy portion of business related demand, particularly from overseas travellers. As business travel is predicted to be the last to resume, this is another factor that will delay the city’s hotel market recovery.
Oxford and Cambridge are also positioned in the bottom 3, sharing similar characteristics with London in terms of a low domestic demand base, coupled with limited hotel stock at the lower end of the market. These markets are also major university hubs and due to the uncertainty of students returning in 2020, they are expected to face a significant reduction in visitation from friends and relatives of students as a consequence. Furthermore, they have a significant reliance on MICE related demand with their venues hosting the Oxford annual International Conference on Childhood Education, the Oxford Farming Conference and the annual Cambridge FinTech conference. It is important to stress here that these markets are in fact some of the UK’s top performers in terms of RevPAR levels, and the Recovery Index only ranks these markets according to how fast their hotel performance is likely to recover to 2019 levels. London, for example, boasts the highest RevPAR in the UK and is one of the most sought after hotel markets in Europe. However, given that our index punishes a high reliance on international tourism and the MICE sector, as well as a low percentage of budget stock, the capital city ranks at the bottom of the index.