London’s upscale hotels report drop in June RevPAR

17th July 2009, 10:14am

Upscale hotels in London reported a 9.7% fall in RevPAR during June compared to the previous year, despite occupancy levels remaining stable, according to the latest city review.

The review carried out by Christie + Co, using data provided by STR Global, indicates that this year upscale hoteliers are offering better deals to maintain occupancy. This has translated into a decline in Average Room Rate (ARR) of 7.4% through May 2009.

Preliminary figures for the month of June suggest that the downturn has continued, with ARR down 9.4%.

London upscale hotels recorded a 5% ARR increase during 2008 compared to the previous year, despite a decline of 3.4 percentage points in occupancy, resulting in a stable RevPAR.

The report found that after a difficult January, occupancy across the capital's upscale hotels managed to hold up at the expense of rate and had shown a slight increase during April and May in comparison to the same period last year.

However, the sharp decline in ARR caused a decrease of almost 10% in RevPAR and, year to May 2009 RevPAR figures were not only below those recorded in 2008 but also below 2007 figures. Preliminary figures for June show a year on year RevPAR decline of 9.7%, steeper than any other month this year with the exception of January.

Andreas Scriven, Head of Consultancy at Christie + Co, said: "The second half of 2009 will continue to feel the effects of the current economic climate, with continued pressure on occupancy and more so, rates. The longer trading performance remains depressed the more likely a reversion to the average rate 'dumping' witnessed in previous recessions becomes. This might potentially put at risk the image of exclusivity that many of the assets in this market segment enjoy.

"Any meaningful recovery is unlikely to materialise until 2010 at the earliest and when it arrives is expected to be moderate. For the upscale sector in particular, the corporate segment will be a determining factor in any recovery. This will need to be supported by high-spending international leisure guests, some of which may see London as a slightly more affordable destination given the softening of the pound against many other currencies.

"On a more positive note, there are have been some tentative signs of an economic stabilisation and the Olympic Games will certainly positively impact London in the mid to long term."

Related Articles:

• 24 Jul 2009 - Recession busting course for small hospitality businesses

Click here to submit a comment!

Have your say!

To comment on this article, simply enter your name and email and send us your views. Please note that your comment will appear publicly below this article once it has been processed. For enquiries please email info@eatoutmagazine.co.uk.

Name

Leave blank

Email

Comment (max 800 characters)