Eurozone Crisis Impacts UK Hotel Industry
As the Eurozone crisis deepens, the UK hotel industry has experienced a slump in occupancy in the period following the Diamond Jubilee in early June. Record rainfall and economic shocks in Europe, which accounts for three quarters of the UK’s overseas visitors, have resulted in a 9% drop in London occupancy; 3% elsewhere.
Figures released today by PKF Hotel Consultancy Services revealed a noticeable decline in occupancy in June as economic recovery concerns at home and the Eurozone crisis overseas brought the hotel sector’s recent recovery to an end.
“The UK hotel sector will be hit if businesses and individuals in struggling EU countries cut back on their spending,” explained PKF partner, Robert Barnard.
“A lack of confidence in the domestic economy and the Eurozone’s ongoing problems, which intensified in June with the uncertainty surrounding Greece’s continued participation in the single currency and the Spanish banking bailout, will have undoubtedly contributed to these results,”
Hotel Performance Slumps
London hotels saw occupancy drop by 9.0% to 82.0% compared with 90.1% in June 2011, whilst room rate increased by 2.2% from £163.40 to £166.96. This resulted in a 7.1% year-on-year reduction in rooms yield from £147.28 this time last year to £136.87.
Hotels in the regions experienced a 3.0% decrease in occupancy from 78.3% to 76.0%. This more than offset a 1.0% rise in room rate from £61.02 to £61.64, leading to a 2.0% drop in rooms yield to £46.82 compared with £47.78 a year ago.
“Although we’ve seen noticeable falls in occupancy across the country in June, it’s important to keep these results in context,” added Barnard. “Occupancy remains high in absolute terms, with London hotels continuing to sell well over 80% of their available rooms during the month.”
Hotel operators throughout the UK will be hoping that the Olympics and Paralympics will have a more significant effect in July.