Hotel demand remained strong across the UK during the summer, but consumers using air conditioning during the heatwave pushed up utility costs and squeezed profit margins, according to RSM UK’s analysis of recent Hotstats data.
July’s data showed utility expenses per occupied room rose from £8.45 in July 2025 to £9.15 in July 2026 across the country. In London, these costs increased from £8.91 to £10.10.
Average daily rates for occupied rooms increased by 4% in the UK, rising from £176.29 in July 2025 to £182.47 in July 2026. In London, average daily rates rose from £264.34 to £274.40 over the same period.
Meanwhile, RevPAR across the UK increased from £152.55 to £155.89, and from £238.15 to £242.57 in London.
Occupancy rates fell slightly year-on-year. UK occupancy dropped from 86.5% in July 2025 to 85.4% in July 2026, while London occupancy decreased from 90.1% to 88.4%.
As a result, gross operating profits for UK hotels dropped from 43.9% to 43%, while London profits fell from 49.2% to 47.7%.
Chris Tate, partner and head of hotels at RSM UK, said: “The UK heatwave over summer has helped hotel demand stay high, allowing hoteliers to make hay while the sun shines with inflation-busting room rates. But the hotter weather has also meant greater use of aircon in hotel rooms as consumers tried to keep cool, leading to higher utility costs to eat into profit margins.
“It’s clear that charging higher room rates is no longer enough on its own to maintain profits and hoteliers must explore other cost-cutting initiatives and ways to create efficiencies. The good news is that consumer confidence appears to be on the up, which should bode well for the hotel industry, but the concern will be whether a tax-raising budget in October reverses all that progress.”
Thomas Pugh, chief economist at RSM UK, added: “Growth is still likely to slow as we head into the winter. Inflation will peak close to 4% in Q4 and stay close to that level in Q1 as higher energy prices begin to push up airfares, manufactured goods and food prices, which will all prevent inflation from returning to target until 2028.
“That, alongside the prospect of another big tax-raising budget, is likely to mean consumption growth slows to around 0.1% in Q4, compared to 0.5% per quarter in the first half of the year.”
Hotel demand remained strong across the UK during the summer, but consumers using air conditioning during the heatwave pushed up utility costs and squeezed profit margins, according to RSM UK’s analysis of recent Hotstats data.
July’s data showed utility expenses per occupied room rose from £8.45 in July 2025 to £9.15 in July 2026 across the country. In London, these costs increased from £8.91 to £10.10.
Average daily rates for occupied rooms increased by 4% in the UK, rising from £176.29 in July 2025 to £182.47 in July 2026. In London, average daily rates rose from £264.34 to £274.40 over the same period.
Meanwhile, RevPAR across the UK increased from £152.55 to £155.89, and from £238.15 to £242.57 in London.
Occupancy rates fell slightly year-on-year. UK occupancy dropped from 86.5% in July 2025 to 85.4% in July 2026, while London occupancy decreased from 90.1% to 88.4%.
As a result, gross operating profits for UK hotels dropped from 43.9% to 43%, while London profits fell from 49.2% to 47.7%.
Chris Tate, partner and head of hotels at RSM UK, said: “The UK heatwave over summer has helped hotel demand stay high, allowing hoteliers to make hay while the sun shines with inflation-busting room rates. But the hotter weather has also meant greater use of aircon in hotel rooms as consumers tried to keep cool, leading to higher utility costs to eat into profit margins.
“It’s clear that charging higher room rates is no longer enough on its own to maintain profits and hoteliers must explore other cost-cutting initiatives and ways to create efficiencies. The good news is that consumer confidence appears to be on the up, which should bode well for the hotel industry, but the concern will be whether a tax-raising budget in October reverses all that progress.”
Thomas Pugh, chief economist at RSM UK, added: “Growth is still likely to slow as we head into the winter. Inflation will peak close to 4% in Q4 and stay close to that level in Q1 as higher energy prices begin to push up airfares, manufactured goods and food prices, which will all prevent inflation from returning to target until 2028.
“That, alongside the prospect of another big tax-raising budget, is likely to mean consumption growth slows to around 0.1% in Q4, compared to 0.5% per quarter in the first half of the year.”
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It is a long established fact that a reader will be distracted by the readable content of a page when looking at its layout. The point of using Lorem Ipsum is that it has a more-or-less normal distribution of letters, as opposed to using ‘Content here, content here’, making it look like readable English. Many desktop publishing packages and web page editors now use Lorem Ipsum as their default model text, and a search for ‘lorem ipsum’ will uncover many web sites still in their infancy.
The point of using Lorem Ipsum is that it has a more-or-less normal distribution of letters, as opposed to using ‘Content here, content here’, making
The point of using Lorem Ipsum is that it has a more-or-less normal distribution of letters, as opposed to using ‘Content here, content here’, making it look like readable English. Many desktop publishing packages and web page editors now use Lorem Ipsum as their default model text, and a search for ‘lorem ipsum’ will uncover many web sites still in their infancy.
It is a long established fact that a reader will be distracted by the readable content of a page when looking at its layout. The point of using Lorem Ipsum is that it has a more-or-less normal distribution
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