Hospitality company Oyo reported a 15% revenue increase from its UK operations in 2024 compared to 2023.
The improvement comes as the company experienced a modest 2% rise in average daily rate (ADR) and a 4% jump in revenue per available room (RevPAR).
The Summer Bank Holiday weekend, from August 24-26, emerged as the most booked long weekend of the year, with August 24 noted as the single highest booking day. Overall, July was identified as the most popular month, reflecting strong seasonal demand.
“By focusing on dynamic pricing and leveraging our AI capabilities, we’ve not only bucked industry trends but accelerated our growth in the UK market,” Gautam Swaroop, CEO of Oyo International, said.
Oyo, which currently operates over 200 budget hotels in 65 UK cities, including key clusters in London, Manchester, Birmingham, Cardiff, and Brighton, has now been pivoting towards the premium segment in the country.
Oyo’s Premium Push
The company recently announced its plans to open more than 40 premium self-operated hotels through leasehold contracts this financial year. To date, the company has onboarded 18 such properties. It aims to add another 22 in cities such as London, Birmingham, Manchester, Liverpool, Glasgow, Bristol, Cardiff, and Edinburgh.
In February, Oyo declared its intention to invest £50 million ($62 million) in the UK over the next three years, emphasizing a push into acquisitions that promise to broaden its footprint and improve market competitiveness.
The company is also expanding its premium vacation home rental brand, Belvilla.
Last June, it announced the launch of Belvilla by Oyo in UK. The company said it would offer a “curated collection of homes in prime locations across London, Milton Keynes, Birmingham, Sheffield and Leeds.”
Oyo’s parent company, Oravel Stays, entered the premium segment with the launch of Sunday Lansbury Heritage in Canary Wharf.
Founder and Group CEO Ritesh Agarwal said at the Skift India Forum last month that the company so far has 7 Sunday Hotels in the UK.
UK Hospitality Market
Following a double-digit growth in 2023, UK hotels saw more normalized performance in 2024. Across the UK, regional hotels have slightly outperformed their London counterparts, showing stronger RevPAR growth in 2024.
London’s hotel sector, for instance, maintained an average occupancy rate of 82% in 2024, equaling pre-pandemic level, according to Knight Frank. However, the ADR in London fell by nearly 1% to £228.
The government’s decision to reduce the use of hotels for asylum accommodations has hit London’s budget hotels hard. By the end of 2024, budget hotels housed approximately 38,079 asylum seekers — a 32% drop from the peak of 56,042 recorded at the end of September 2023, according to a BBC report.
London’s upper-upscale hotels have outperformed the wider London market both in terms of occupancy and ADR.
The Knight Frank report further noted that the UK hotel sector is facing a potentially volatile period of trading. An increase in payroll costs, rise in employment taxes, and potentially weakening consumer confidence could impact profitability.
“Our AI-powered pricing engine continues to drive optimal revenue for our hotel partners, while our automated solutions are helping address key industry challenges like rising operational costs and staff shortages,” said Puneet Yadav, country head of Oyo UK.
According to projections from Cushman and Wakefield, RevPAR increases in 2025 is said to go up by 3.5% in London and 4.6% across the nation compared to 2024.
Despite short-term challenges, there are longer term trends to watch. Factors such as a weaker pound supporting inbound visitor flows and investment, demand for experience-led and leisure stays, and the return of outbound travel from Asia could boost travel to UK.
Accommodations Sector Stock Index Performance Year-to-Date
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