Regional hotels experience fall in room rates

28th May 2009, 11:06am

While London hoteliers were successful in filling their beds in April, regional hotels suffered a significant fall in room rates and occupancy, according to monthly figures released today by PKF Hotel Consultancy Services.

Average room occupancy in London was 82.5%, up 0.9% on April 2008 but room rate fell 10.6% to £123.85 dragging rooms yield down by 9.7% to £102.11.

Although room occupancy held out well, given the recession, it is likely that this was only achieved by extensive use of leisure discounting deals to attract visitors into the capital over Easter.

The April figures showed that room rates fell by 11.2% from £78.17 in April 2008 to £69.43; occupancy was down 13.6% to 63.9%; and rooms yield plunged 23.2% to £44.40. The year to date fall in yield has now fallen 15.6% from £51.93 in 2008 to £43.85.

The UK's second and third largest cities – Birmingham and Leeds – had a poor April as did Liverpool and Manchester, the seventh and ninth largest. Birmingham hoteliers suffered a 20% drop in occupancy and 15% reduction in room rate which resulted in rooms yield falling by almost a third (32.1%) to £42.72.

Leeds fared almost as badly with the combination of a 24% drop in occupancy and a 9% fall in room rate causing a 30.8% plunge in yield to £40.45 from £58.46 the previous April.

Liverpool rooms yield also fell sharply by 28.6% to £59.55 while Manchester rooms yield dropped 21.7% to £55.77.

Robert Barnard, partner for Hotel Consultancy Services at PKF, commented: "While the buoyant occupancy figures for London are indicative of the capital's resilience to virtually every kind of economic, political, biological and climatic turbulence, hoteliers are clearly sacrificing margin in order to fill their beds. The longer the recession continues, the more it will eat into these margins and the harder it will be for hotels to survive.

"But London has enduring appeal as a major world destination and the long range weather forecast for a hot summer and the vast programme of concerts, sporting and cultural events can only be good news for battling hoteliers.

"The worsening scenario in the UK's major cities, however, must be of serious concern to the hotel industry as a 30% drop in yield clearly cannot be sustained over a long period of time. It is too soon to say how much the April Easter is responsible for the dire results but we can only hope that the glimmerings of more positive economic news among the gloomy headlines will result in a better second half of the year."

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