Hotel Industry Recovery – Green Shoots of Hotel Industry Recovery

UK hoteliers are feeling quietly confident about the year ahead with the first growth in occupancy rates since the economic situation first emerged.

Following a 10 per cent RevPAR decline in 2009, PricewaterhouseCoopers have forecast an increase of 5.8 per cent this year, and a further 7.8 per cent in 2011.

For the moment, these green shoots are mainly visible in London and the surrounding districts, where the growth spurt is predicted to provide hoteliers with sufficient volume to push up room rates by around 3.5 per cent this year. This will foster an average rate of nearly £120.

“London’s supply constraints, and the cautious return of the private sector business traveler, competing with leisure guests for space, will drive room rates up,” explained PwC head of hotels research, Liz Hall.

“Occupancies should start to stabilise in early 2010 following 11 quarters of decline and room rates are forecast to start recovering from Q2 this year. Growth will be slow but it’s not all bad news with some regional centres bucking the trend.”

It is expected that RevPAR growth for the London provinces in 2010 will stand at around 1.6 per, rising to 3.1 per cent the following year.

With the pre-Olympic supply kicking in for hoteliers next year, it looks likely that the industry will experience a 3.7 per cent ARR growth and an increase of in rates to around £124 in 2011.

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