As global attention turned to the highly anticipated, publicised and historic event that is a British Royal Wedding, Pegasus Solutions’ came up with its special edition of The Pegasus View, revealing the Royal Wedding’s impact on London travel.

Published: 02 May 2011

As global attention turned to the highly anticipated, publicised and historic event that is a British Royal Wedding, Pegasus Solutions’ came up with its special edition of The Pegasus View, revealing the Royal Wedding’s impact on London travel.

Heightened Demand Prompts Higher Rates, Longer Stays and More Revenue per Stay for London Hoteliers

The combination of immense fascination with the Royal Wedding, its proximity to the travel-friendly Easter holiday and hopes for mild and inviting spring weather have fueled high demand for London hotel rooms.

Not surprisingly, the average daily rates (ADRs) are elevated to make the most of the anticipated increase in demand. When making comparisons to last year, it’s important to note that volcanic activity in Iceland virtually brought travel in Northern Europe and the U.K. to a halt during the timespan of April 16th-21st. Lingering ash clouds caused brief, isolated flight restrictions even into the first week of May.

However, booking volumes, ADR and average length of stay (LOS) were returning to more normal patterns by the week of April 25th and later, with any remaining percentage change impacts falling to single-digits. Even with consideration of Iceland’s volcanic activity last year, the double-digit, rising to triple-digit, percentage increases over prior year in net ADR, average LOS and average revenue per reservation in London clearly indicate an that this unique event is having a significant impact on travel trends in London.

Rates: Hoteliers Seize the Day

As is the case during most highly attended events anywhere, London hoteliers are not going to let the opportunity to profit from this long-awaited occasion pass them by.

• Actual and forward-looking data shows substantial mid-week increases in ADR throughout April, with each weekend in April registering greater double-digit increases over prior year, finally ramping up to potential triple-digit increases the weekend of the wedding.

• From bookings made as of April 21st, ADR shows an increase of +87.6% over prior year on the wedding day itself. The highest potential ADR increase, however, appears the next day, April 30th, reaching +134.0% over the same day of the week last year. May 1st looks to round out a full weekend of triple-digit ADR growth with an increase of approximately +100%.

• The week and weekend following the wedding still indicate substantial ADR increases, but show signs of easing moving past Saturday. This suggests most hoteliers are banking on the week after Easter Sunday and leading up to the wedding as the prime time to raise rates. The weekend of May 6th, for example, displays double-digit increases but nowhere near the triple-digit range for the weekend of the wedding.

Length of Stay: What It Reveals

Those traveling to London appear to be making the most of their trip and the holiday, by increasing the average number of nights usually spent on a trip during this period compared to last year. It appearsthat, while a great number look to leverage the Easter time off work and school, a large number are choosing to use the week after the wedding for their extended stay — perhaps in hopes that crowds maybe lessening and rates may be decreasing.

• Actual and forward-looking average LOS reflect the same trend as we see for rates, rising into double-digit increases over prior year leading up to the wedding, and potentially increasing bybetween +100% to +130% over last year for the two days immediately following the ceremony.

• Although increases in LOS for arrivals after the wedding don’t look to reach triple digit levels, forward-looking LOS does display an increase of+90.2% greater than last year for Saturday, May 7th.

Greater ADR and Longer Stays Equal Greater Revenue per Booking

The result of higher rates and more nights per stay equates to more total revenue achieved for each individual trip.

• With forward-looking double-digit ADR and LOS, net average revenue per booking looks to consistently reach triple-digit increases over prior year each weekend leading up to the wedding,potentially reaching almost +200% over prior year on April 28th and 29th, and over +300% on April 30th and May 1st.

• Although ADRs appear to stay some degree higher the week after the wedding, a key factor keeping the average revenue per booking in the triple digit growth range for the weekendfollowing the wedding is the much increased LOS.

Country of Origin: From Where are the On-Lookers Flocking?

The greatest number of bookings for London during this period, in general, stem from domestic U.K. travel. However, we do see that the percentage mix of stays stemming from domestic travel over this time period actually looks to decrease by about 15 percentage points. This suggests that while many Britons living outside the city will want to take advantage of their relatively close proximity and partake in the excitement and tradition, a great many will also take the opportunity to escape the crowds, enjoy a more peaceful holiday elsewhere and catch the ceremony on television.

The second highest country of origin for inbound bookings to London during this period remains the United States. The difference here being the percentage mix for travellers from the U.S. during this time period looks to increase by about 10 percentage points from usual levels.

The next two countries with the highest London-bound bookings so far are France and Germany. Both typically make up the two next highest sources of inbound travel, with France increasing its percentage mix by about 3 percentage points over this period and Germany looking to end up just below its usual percentage mix by about one percentage point.

Key Takeaways

• London hoteliers raised rates substantially to benefit from the increase in demand

• Travellers are combining the chance to experience the atmosphere of the event first-hand with an extended spring vacation; many leveraging the extended holiday but some opting to stay on longer (during the week following the nuptials) in hopes of less crowds and easing costs.

• With increased ADR and LOS, revenue per booking shows potential of triple-digit growth over the same days last year for the weekend prior, during and following the royal nuptials.

• While most inbound travel to London remains domestic, the percentage of bookings from within the U.K. looks to decrease from usual levels as people from other key feeder markets appear to express greater interest in experiencing this event first hand.

In short, the event that is captivating the world has set the stage for London hoteliers to capture big revenues.