Hotel Industry: The Recovery Begins!

The UK hotel industry saw a significant recovery in 2010 following the challenges of 2009, according to Hotel Britain 2011, PKF’s definitive guide to the performance and prospects of the UK hotel industry.

The report reviews the performance of 549 hotels representing over 92,117 rooms across both London and the regions.

Robert Barnard, Hotel Consultancy Services Partner at PKF Accountants & business advisers, acknowledges that while this is positive news, much of this upturn is attributed to London which still remains the power house behind the UK hotel industry.

“London hotel performance improved substantially in 2010 when compared to 2009,” said Barnard, “despite the ash cloud which closed most of Europe’s air space for six days in April, and the extreme winter snow which caused extensive travel disruptions.”

In the first half of the year, London benefited from the weak pound which encouraged overseas visitors to the UK and boosted a demand for accommodation in the capital. This led to room yields increasing by 12.5% in 2009 to £119.57 – the highest they have been for the five year period under review. And during the second half of 2010, the biennial Farnborough Air Show and a pick up in corporate and event business resulted in London posting an average of 92% occupancy for the month of July.

Hotel Industry in the Regions

“By contrast, the picture in the regions is less rosy largely due to corporate belt-tightening with business travel and accommodation budgets remaining strictly controlled,” added Barnard. “This particularly impacted the meetings, incentives, conference and events (MICE) market; although there were signs towards the end of the year that the situation was changing with a zest for meetings and events in regional hotels returning.”

“Countrywide, England and Scotland achieved rooms yield growth of 2.7% and 1.1% respectively while Wales was down 0.4% due to an annual drop in occupancy of 0.7%.”

Looking to the future, Hotel Britain 2011 predicts continued uncertainty for the UK hotel market with much depending on the outcome of wider global issues such as increasing oil prices, economic and financial scepticism, and events in the Middle East, North Africa and Japan.

“The road ahead for the UK hotel market remains stubbornly turbulent and will continue to be impacted by broader worldwide issues,” concluded Barnard. “We expect London to remain stable with some anticipation of growth especially as it benefits from the build up to the Olympic Games, the Royal Wedding and the Champions League Final. The recovery of the performance in the regions will, however, continue to be slow and dependent on growth in the MICE and corporate markets.”

Note: You can read the top trends that defined the 2010 hotel industry here.

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