High occupancy provides opportunity for London hoteliers
Marvin Rust, Hospitality Managing Partner at Deloitte, commenting on the London results said: “RevPAR is currently down 7.3%, and the rate of decline has subsided by a couple of percentage points since April. Year-to-June occupancy is down by less than one percentage point to 78%. Although strong occupancy has come partially as a result of a 6.4% drop in average room rates, it is important to start pushing up average room rates now that occupancy is stabilising.”
However, revPAR decline across regional UK has accelerated over the past few months by one percentage point to 13.7%.
Hotels in Glasgow, Edinburgh and Newcastle have fared pretty well so far this year with revPAR falling 1.6%, 4.5% and 4.9% respectively. Glasgow, the least affected market in the UK, achieved 71.8% occupancy and average room rates have only dropped marginally by 0.8%. Despite the economic conditions, the city continues to attract both leisure and corporate demand by hosting a number of world class concerts and some of the lowest average room rates in the country (£64) are attractive to the Meeting, Incentives, Conventions and Exhibitions market.
Airport hotels are among the worst performing, with revPAR at Heathrow and Gatwick falling more than 20% each. Dwindling passenger traffic (down 9.8% at Gatwick and 3.8% at Heathrow year-to-June 2009) and less cabin crew demand due to airline capacity cuts is having a negative knock-on affect on hotel performance.
Marvin added: “The jury is still out about when the UK economy will recover but currently most are anticipating a sluggish recovery in 2010. Regional UK hotel performance has a strong correlation to UK gross domestic product performance and should start improving as the recession subsides. However, regional performance could be buoyed by strong domestic demand for tourism this summer as more Britons holiday throughout the UK. Overall, hotels in both London and the regions have held up exceptionally well in the global economic downturn with revPAR down by only 11.1%, especially when compared to other countries across Europe, some of which are seeing revPAR drop up to 40%.
Year-to-June U.K. hotel performance
|Occupancy (%)||Average Room Rate(£)||RevPAR (£)||RevPAR % change|
All analysis in GBP
All data is daily STR Global daily data covering the period from 1 January – 30 June 2009
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