Average Hotel Rate in the UK Drops!

A global report demonstrating how the cost of a nights stay in a major city can reflect the country’s economic health, has revealed that hotel prices in the UK are stagnating, with only London’s hotels being able to report a rise in the average hotel rate.

Prices in the booming economies of the ‘BRIC’ countries, Brazil, Russia, India and China have soared, but the UK hotel industry has experienced a drop of one per cent for the price of a hotel room.

Hotels.com Price Index, which is a comprehensive survey of hotel rates, has shown a mixed picture across Europe, with Athens facing a 10 per cent decrease, thanks largely to the financial crisis in Greece. However, in traditional city-break destinations like Barcelona and Amsterdam, there was a rise of 9 per cent in hotel rates.

During the survey, the hotel prices of 85 countries were looked at with the findings showing that British tourists were facing higher rates and price volatility, which was preventing them from being able to stay at some of the best overseas holiday destinations in the world.

High Hopes for the Future

It is hoped that UK cities and London in particular, will benefit from the events happening in the country in 2012, with the celebrations of the Queen’s Diamond Jubilee, the Olympic Games and Paralympics expected to attract millions of visitors. A similar kind of effect occurred in Ireland in 2011 with the visit of Barack Obama and The Queen, helping to boost Dublin’s average room rate.

The 2012 business outlook from PricewaterhouseCoopers (PwC) for the UK backs up the Price Index figures as it is one of an overall weaker travel and hotel picture as UK and European GDP (Gross Domestic Product) growth slows. That said, they have predicted a record year for London with 2.8 per cent RevPAR growth and occupancy in the capital hitting around 92 per cent in the third quarter of the year. Many operators however, fear that business will flatten in the second a fourth quarter of 2012, with RevPAR declines being witnessed.

In the other UK regions, PricewaterhouseCoopers predict another difficult year with only a small demand boost during the year for areas holding Olympic events outside London. The UK tourist board are promoting holidaying in Great Britain this year, but although the ‘staycation’ concept might boost occupancy slightly, RevPAR is predicted to fall by 1.2 per cent.

Looking to 2013

PwCs first forecast for 2013 is brighter news for the regions but depressed trading is expected in London with the prediction of a 3 per cent fall in occupancy in the capital. However, hotels in the UK regions are forecast to benefit from stronger economic growth expectations and enjoy a rise of 2.4 per cent in rates, 2 per cent on RevPAR, but witness a 0.3 per cent decline in occupancy levels.

The outlook for 2012 is good for London, boosted by the Olympics but the forecast for 2013 is better for the regions thanks to expected economic growth. One thing is for sure, despite the hotel industry still slowly emerging from the crisis of the credit crunch, it is still a minefield out there for the majority of our hoteliers.

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