Improving Economic Conditions And Recovery In Travel Demand Drive A UK Hotel Revival – PricewaterhouseCoopers Reports

New statistics issued by PricewaterhouseCoopers anticipate a rebound for the UK hotel sector. A global economic recovery is clearly underway, driven by an improving outlook in the world's major economies and revised forecasts for UK Gross Domestic Product (GDP) now expect the economy to grow by 3.2% in 2004.A recovery in equity markets is bolstering business confidence and in the UK, business investment picked up strongly in the fourth quarter of 2003.

Already many leading hotel groups' finances have reflected the improvements and reported firming demand in the first quarter of 2004. However uncertainty in the Middle East and rising oil prices could restrain the travel recovery to some degree.

Nevertheless, reflecting the revival, PricewaterhouseCoopers latest forecast for the UK in 2004 is cautiously bullish. PricewaterhouseCoopers anticipates 4.2%Revenue Per Available Room (RevPAR) growth overall, with a 4.1% RevPAR gain in the Provinces and a 4.5% RevPAR rise for London, supported by both average daily rate (ADR) and occupancy gains. In 2005, upward GDP revision and the expectation of further global growth should result in more positive RevPAR gains for UK hotels and an 8.8% gain in London.For 2006, the trends is set to continue although anticipation of a deceleration in the UK economy may temper growth. .

Robert Milburn, PricewaterhouseCoopers UK hospitality and leisure leader commented:

"As predicted last year, a return to more profitable trading is already beginning to generate a high level of interest from buyers and sellers of UK hotel assets. The luxury Savoy Group recently bought by the Irish investment company Quinlan Private for £750 million (US$1.3 billion) and auctions at Queens Moat Houses and Premier Lodge, the budget hotel chain with a price tag of £550m on it, are said to be attracting considerable interest.

Liz Hall, PricewaterhouseCoopers UK hospitality and leisure research manager added:

'While it is too early to tell whether gains in both passenger volumes at London airports and overseas visitors entering the country portend a sustainable recovery for 2004, indicators so far suggest there are clear grounds for optimism for the summer months. The prospects for London's tourism industry in 2004 appear brighter than for some time and the capital looks like leading the UK recovery."

• Hospitality Directions - Europe Edition - May 2003 is available electronically by subscription only (£190 per annum - includes biannual publication plus two updates).Copies for the media are available from Semi Da-Cocodia, PricewaterhouseCoopers on +44 (0) 207 804 2189 or [email protected] direct all other queries to Victoria Heaver on +44 (0) 0207 212 3467 or [email protected].
• 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.
• 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.