UK hotels' revpar forecast to outpace inflation in 2007 | Tri Hospitality Reports

After beating forecasts in 2006, the UK hotel industry is set to see the rate of growth of revenue per available room slow, according to forecasts by business adviser TRI Hospitality Consulting, published today.

But the growth is still ahead of the rate of inflation with revpar expected to rise 3.4 per cent for provincial hotels and a healthy 5.6 per cent in London during 2007.

The same forecasts, contained in the TRI Hospitality Consulting publication Hotels2007, show that revpar in 2008 is expected to rise by 3.0 per cent in the provinces and 4.9 per cent in London.

“Last year proved a bumper year in terms of sales at hotels and while there will be a marked slowdown in the rate of growth in the years ahead, the future still looks bright for Britain’s hoteliers,” said Jonathan Langston, managing director of TRI Hospitality Consulting.

The overall picture for the hotel industry is one of strength thanks to a generally benign economic outlook. There are some warning signs of a slowdown – such as rising interest rates and rising unemployment – but overall, there are no immediate signs of a recession looming.

The international picture is mixed, with the US exhibiting some slowdown but this is countered by a more robust Eurozone.

“The demand outlook for hotels is not entirely cloud-free but there does not appear to be a storm imminent,” said Langston.

Supply growth may cause problems for some

On the supply side, there is currently a vast amount of development activity in the pipeline. Some markets, such as Cardiff, Liverpool and Manchester, are already nearing saturation.

“So far, new-build hotels have tapped into growing demand. Going forward, the weaker, older, under-invested and unbranded hotels are likely to feel much more pressure,” said Langston.

The biggest growth is coming from the budget sector. The two biggest players, Premier Travel Inn and Travelodge, have between them announced plans to add over 23,000 rooms or more than 300 hotels by 2010.

“The key issue is the extent to which these budget hotels succeed in taking customers away from the mid-market and upper mid-market hotels,” said Langston.

The TRI forecast for the total UK hotel industry is for a 4.4 per cent rise in revpar in 2007 to £56.26 and a 3.9 per cent rise in revpar in 2008 to £58.46.

The sample of accommodation providers in Hotels2007 achieved a revpar of £53.87 based on occupancy of 72.6 per cent and an average room rate of £74.20.

“Last year will no doubt go down as a golden year for hoteliers in the UK after three years of consistently strong rises,” said Langston.

For more information contact Jonathan Langston on 020 7486 5191 or email [email protected].