Industry Update
Editorial Article 5 April 2010

Double-digit 2010 RevPAR growth for London | Deloitte Reports

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Hoteliers in London could see double-digit revenue per available room (RevPAR) growth this year, according to the latest Hotel Market Outlook, a quarterly report issued by Deloitte.


Marvin Rust, Hospitality Managing Partner at Deloitte, said: “Actual Q4 2009 results in London smashed predictions, seeing RevPAR rise 7.4 percent rather than the 3.5 percent decline previously forecast, and the start to Q1 2010 has been impressive. Year-to-date gains of 10.1percent have already been recorded, and while Q1 as whole will be a little softer than the original prediction of a 15.8 percent RevPAR rise, due to the bad weather, it does look set to end with gains in the region of 10 – 15 percent. With no further shocks, this could be a year that sees double-digit growth in the capital.”

The latest Outlook, which crunches data from STR Global, expects the first three quarters of the year to post double-digit revPAR increases, although this will decelerate towards the end of the year. More than £10 is expected to be added to average room rates in London while occupancy is expected to peak in Q3 at 87.2 percent. However, the first outlook for 2011 suggests that the strong growth this year will not be sustained next year, with revPAR growing at a more moderate 1.4 percent.

The immediate outlook for Regional UK hotels is not as optimistic as for the capital. Steady and sustained growth is expected during the course of this year and into next. Occupancy is expected to claw its way back during Q1, and will continue to grow throughout the year. Although it will take until the latter part of the year for any meaningful gains to be seen in average room rates, this will eventually follow. As a result, RevPAR growth is expected to rise 6.3 percent in 2010. In 2011, Regional UK hotels are expected to post stronger growth than the capital, up 5.6 percent.

The outlook is produced using data from an inconsistent sample of hotels collected by STR Global Limited. This data is input into an econometric model developed by the independent economic research firm, e-forecasting Inc, to produce hotel performance outlooks for the London and Regional UK markets.

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