UK Hotel Industry Continues To Suffer Through First Quarter Of 2009
Hotels in London brought up the UK average slightly with a revPAR decline of 8.1%, falling just over £7 to £82. A 4.8% drop in occupancy was the main culprit while average room rates were not far behind - down 3.5% to £113.
Marvin Rust, Hospitality Managing Partner at Deloitte, commenting on the results, said: “The weak pound is one factor helping London hotels perform better than other UK destinations. For those who earn U.S. dollars or Euros, London is less expensive than it has been for a number of years, and therefore tourists are keen to take advantage of this and are helping to fill London hotels.”
Meanwhile, revPAR drops were more extreme across regional UK, down 10.3% to £41. The largest drops were at Gatwick and Heathrow Airports, down 23.5% and 21.9% respectively. BAA reported a 10.1% drop in passengers at UK airports during the first quarter with one of the most dramatic falls at Gatwick – down 14.6%. Fewer people travelling abroad is resulting in lower demand at airport hotels. Passenger numbers were also down 6.4% at Heathrow accounting for some of the drop off in hotel performance. However, the situation was made worse by the surge in new hotel supply associated with the opening of Terminal 5. Several new budget hotels have opened recently in addition to the 605-room Sofitel London Heathrow.
After strong revPAR growth in 2008, when Liverpool played host to the European Capital of Culture celebrations, the city has not been able to maintain this growth and is proving susceptible to the economic downturn with revPAR down 16.0% to £43.
Glasgow is bucking the trend with revPAR down only 1.7%, the smallest revPAR drop across the UK. With one of the lowest levels of revPAR in the UK at £41, the city therefore continues to be an attractive value for money option.
Marvin added; “Reduced consumer and business spending stemming from the global economic downturn continues to challenge the hotel industry and this will be the story until at least the final quarter of 2009. Deloitte’s first quarter CFO Survey revealed that cost cutting measures are now almost universal and 95% of CFO’s plan to cut, or have already cut, discretionary spending such as travel, hotels, entertainment, and training. More Brits holidaying in the UK this summer and an increase in the number of American and European visitors taking advantage of the weak pound will soften the downturn for hoteliers to a degree. However, we are still looking at considerable revPAR declines for both regional UK and London for the rest of the year.”
UK city performance – Q1 2009
All data is daily STR Global data covering the period from 1 January – 31 March 2009
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