'Wait And See' Consumers Cloud Travel Outlook As UK Hotel Sector Braces For Another Disappointing Year - PricewaterhouseCoopers Reports

Robert Milburn, PwC partner responsible for UK hospitality and leisure services, commented:

"This latest forecast points to 2003 being a stand still year for UK RevPAR. But the concern has to be that further economic slowdown, coupled with the continuing threat of war and concerns over terrorism, make it a step backwards year, particularly in London."

The report entitled "Hospitality Directions ? Europe Edition February 2003" (Hospitality Directions Europe) concludes that the sector has already undergone two very difficult years and revenues are unlikely to improve in 2003. The report also records positive news that a weak recovery is taking place, with some success stories, especially for hoteliers with portfolios outside London; for short breaks; and for budget flights. In addition, in economic terms the UK is expected to outperform most of Europe in 2003.

Recognising these factors the report now expects a 1.4 % RevPAR gain for the UK as a whole, compared to the 3.1 % RevPAR growth anticipated in PricewaterhouseCoopers previous (November 2002) forecast. Little growth is likely in room rates this year, especially in London, where only a marginal RevPAR increase of 1% is expected this year. RevPAR growth of 1.8 % is forecast for the Provinces. At this stage, PricewaterhouseCoopers continues to envisage

stronger corporate and leisure travel growth throughout 2004, but much depends on the outcome of the international political arena.

Liz Hall, research manager, PricewaterhouseCoopers Hospitality and Leisure Group added:

"The economic slowdown had already depressed corporate travel volumes but there are fears that a fall in consumer confidence could also dent leisure travel to date a bulwark for besieged travel and lodging industry businesses. Security is a key concern and as more consumers adopt a 'wait-and-see' stance, late bookings make it harder to see an emerging pattern."

In the Provinces, short breaks and budget flights have proven exceptions to the general travel gloom. The domestic travel sector benefited from travellers staying closer to home in 2002 and may do so again in 2003. In 2002 short stays in the UK showed a 5 % increase between 1995 and 2001, against a 17 % fall in longer stays.

The latest Alert forecasts for:

1. Revenue per available room (RevPAR) - is a key performance metric used in the hotel industry which reflects demand. It is calculated by multiplying a hotel's average daily room rate (ADR) by its occupancy rate.
2. 'Hospitality Directions ? Europe Edition ? February 2003 is available electronically by subscription only (£190 per annum - includes biannual publication plus two updates). Press copies are available from Semi Da-Cocodia, PricewaterhouseCoopers LLP on +44 (0) 207 804 2189 or [email protected]. Please direct all other queries to Shannon Smith on +44 (0) 207 212 3467 or [email protected].
3. Launched in January 2000, PricewaterhouseCoopers 'Hospitality Directions - Europe Edition' is a biannual research journal, with quarterly forecast updates, offering original research on the European lodging industry. The journal draws on PricewaterhouseCoopers extensive lodging data collection, empirical studies and solid econometric models to support all positions and conclusions.
4. PricewaterhouseCoopers (www.pwcglobal.com) is the world's largest professional services organisation. Drawing on the knowledge and skills more than 125,000 people in 142 countries, we build relationships by providing services based on quality and integrity.