UK hotels face most challenging conditions in 17 years

9th February 2009, 11:05am

UK chain hotels are facing the most challenging trading conditions in 17 years according to forecasts made by TRI Hospitality Consulting.

The hotel advisory firm predicts that London will experience a 10% drop in room revenue (revpar) this year followed by a further 0.5% dip in 2010. In the provinces revpar is expected to decline by 8% in 2009 and a further 2% in 2010.

Meanwhile, according to VisitBritain, inbound visitor numbers, which account for more than half of London hotel overnight stays, are estimated to have decreased by 2.7% last year and will decrease by a further 0.7% this year.

Jonathan Langston, managing director of TRI, commented on these figures: "VisitBritain's forecast for inbound tourism in 2009 might seem fairly modest in the light of the widespread global downturn. Yet, if it continues, the low value of sterling against most major currencies may have a moderating effect on anticipated reductions in inbound tourism. For the first time in many years London must appear a good-value destination."

TRI predicts that revpar will limit to 2% in 2010, and occupancies should have stabilised at 2009 levels; with all of the fall predicted to result from reductions in average room rates.

London hoteliers should also have the opportunity to stabilise average room rates at the end of this year and may lose a minor level of volume, leaving revpar only 0.5% behind 2009. On the other hand, if the UK is still in recession, the downside scenario sees London losing a further 3% in revpar.

"It is our prediction that despite the coming heavy falls in Revpar, UK hotels will maintain profit conversion at a higher level than they did in the early 1990s. UK hotels are better prepared for recessionary times than they were in 1991 due to a combination of structural reforms to cost bases during the intervening years and far greater access to markets through today's enabling technologies.

"In addition, they enter this recession enjoying much higher occupancies than in 1991. Then, there was something of a lag of six months between economic change and its impact on hotel trading. Things move faster these days; although forward visibility remains minimal, any reaction to more positive economic news will be more rapid."

Related Articles:

• 28 Oct 2009 - London hoteliers boost profits
• 01 Oct 2009 - European hotels experience a weak August
• 28 Sep 2009 - Holiday makers boost occupancy levels for UK hotels
• 18 Aug 2009 - UK hotel general managers remain positive
• 28 Jul 2009 - Occupancy levels hold up at London hotels
• 25 Mar 2009 - Profit down by 17% at London hotels
• 03 Mar 2009 - Hotel's revenue and profit continues to fall

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