Post Election Cuts – The Impact for UK Hoteliers

Despite the good news that Rev-PAR figures for London-based hoteliers are set to grow over the next two years, instability from the recent election has already been felt.

Whilst hoteliers are enjoying rejuvenated corporate demand, this growth is likely to be tapered by George Osbourne’s initial £6.2 billion of public sector cuts this financial year.

Hotels: An Easy Target?

Assuming a dependency of 30 per cent of hotel business on public sector supply, cuts could shave almost 1 per cent off the latest UK RevPAR growth projections in both 2010 and again in 2011, according to PricewaterhouseCoopers.

“Occupancy is likely to be the first casualty of any post-election cuts as travel budgets are slashed,” explained PricewaterhouseCoopers UK hospitality and leisure leader, Robert Milburn. “Private sector business is also dependent on public sector contracts which could reduce the number of corporates traveling as well.”

“That said, 70 per cent of those hoteliers we polled are more optimistic than they were six months ago. Group and transient business is picking up and there is hope of pent up demand for face to face meetings.”

Although there are signs of recovery, this is a far cry from business-as-usual – and it will be the owners and operators of UK hotels that feel the squeeze.

“More generally growth rates are not all they seem to be,” concluded Milburn, “any growth is off a low base and comparables are poor. The waters ahead appear calmer, but economic recovery may still falter.”

By Lee Jamieson

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