UK's Hotel Market June Verdict: 'Things Are Not Good… But They're Less Bad' - PKF Reports

UK hoteliers are still experiencing tough trading conditions, as figures for June, released today, show the market has still failed to gain back the ground lost in June 2002, according to PKF.

London hotels reported occupancy up 1.8% to 78.9%, but a 5.5% drop in room rate to £100.18, left rooms yield trailing at £79.07, down 3.8% on last year. However, with June 2002's two bank holidays and the Queen's jubilee celebrations, rooms yield had plummeted 14.6%, which means in real terms this year's further decrease is more serious than it initially appears. Despite the slight increase in occupancy, London has not returned to 2001 trading levels, let alone the heights of 2000 or the late 1990s.

Outside the capital, hoteliers fared a little better, seeing occupancy up 3.8% to 73% and room rate creeping up 0.7% to £62.37, boosting rooms yield by 4.5% to £45.52. But again, looking at last year's figures, the regional hotel market reported rooms yield down 7.1%, so the market has not yet clawed back the losses of June 2002.

Melvin Gold, managing director of hotel consultancy services at PKF, said "London continues to be more influenced by global events, while the hotel market outside the capital is more affected by the domestic economy. The recent interest rate cuts by the Bank of England show that steps are being taken to tackle concerns about the economy, but any downturn in the UK economy affects the hotel industry, particularly businesses outside London. Trading continues to be difficult and hoteliers are striving to achieve last year's rates, with the focus continuing to be on occupancy growth. The main message seems to be that it's not good - but it's less bad!

"Forecasting remains difficult in the global environment, which still remains somewhat fragile. In the UK we have recently seen many positive images, with major events such as the Wimbledon tennis championships and world famous golf tournament the Open Championship being beamed onto TV screens around the world, which can only be a boost to the leisure and tourist industries. However, the unexpected strike at Heathrow, the UK's key international airport, has been a blow to the nation's reputation as a travel destination and those images are a negative with the potential to undo much of the tourism industry's hard work."

Notes to editors:

1. PKF is the eighth largest firm of accountants and business advisors in the UK with more than 1,600 partners and staff operating in over 25 offices around the country. Principal services include assurance and advisory; consultancy; corporate finance; corporate recovery and insolvency; forensic; and taxation. The firm has particular expertise in sectors such as charities; technology and e-commerce; hotel consultancy services; medical; professional partnerships; and public sector.
2. PKF also offers financial services through its FSA authorised company, PKF Financial Planning Limited. PKF is a member of PKF International, which has more than 8,000 people operating in over 100 countries around the world.
3. PKF has been providing hotel consultancy services since the early 1970s and, in that time, has undertaken thousands of assignments throughout Europe, the Middle East and Africa and further afield. Services include: market evaluation and financial feasibility studies; operational and profit improvement reviews; asset management; business valuations; international property services; corporate strategy and planning; litigation support. PKF's web site features regular articles from the firm's hotel consultancy services experts on industry topics - the address is .
4. PKF's hotel trends surveys feature a broad range of hotels across the country although mainly in the 3 - 4 star categories and featuring rather more chain operated hotels than those operated independently. While there is a fair number of hotels in country and rural areas, there is a predominance of hotels in towns and cities. In London, supply featured is mainly in the 3 -5 star categories.
5. Final data for May 2003 - See below chart
6. A PKF Hotline provides free advice to anyone facing financial difficulties. The hotline - 0845 1 22 00 44 - is manned Monday to Friday during office hours. Callers will be automatically directed to a local expert. All calls are charged at local rates.
7. Definition of the key terms used in the surveys table are given below:Room occupancy: the ratio of total occupied rooms to total available roomsAverage achieved room rate (AARR): rooms revenue divided by the total number of guest rooms occupied during the year.Rooms yield: room occupancy multiplied by the average achieved room rate (also known as RevPar).