UK airport crisis boosts hotel occupancy

Following the recent security alerts at UK airports hotel operators, particularly those in the vicinity of Heathrow and Gatwick airports, have seen occupancy and rates rise as large numbers of passengers seek short-term accommodation.A review of hotel performance based on the HotelBenchmark Survey by Deloitte shows that hotel occupancy in the Heathrow and Gatwick area since Thursday has risen dramatically in the five days since the threat was uncovered. At Heathrow, occupancy jumped to 92.4% from 83.9% the week before. At Gatwick the corresponding figures were 84.6% and 79.4%.

Room rate has risen significantly up to £67.87 from £58.16 the previous week at Heathrow and up from £59.55 to £64.22 at Gatwick.

While it is too early to predict the full impact of the airport situation on tourism overall, the impact is expected to be minimal. The reality is that since 9/11 consumers have become increasingly resilient to the threat of terrorism. After the attacks on London last year, and Madrid the year before the markets recovered quickly with hotel occupancy levels returning to normal levels six months.

Commenting, Marvin Rust, Tourism Hospitality and Leisure Partner at Deloitte said: “High hotel demand during a time of flight cancellations is not surprising. What hotel operators are more concerned about is the impact on demand over the coming months. Hotel operators should take some comfort from past events. Fortunately, in this case, the attack was intercepted and loss of life prevented. Security measures have since been significantly stepped up at all UK airports. Whilst there may be some immediate concern particularly from the US travellers visiting London who have historically been the most reluctant travellers to areas considered to be a risk - at this moment in time, we would not expect this to have a long-term impact on the UK hotel market.

“The impact on the London tourism industry will critically depend on the restoration of normal air services, as well as the ability of the Government to reassure tourists that London is a safe destination for visitors.

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“The role of Government at this time in working with the industry will be crucial to the recovery process. While the major airlines, hotel and tour operator groups may have appropriate levels of insurance in place for an event of this nature and can withstand the shock if not, many of the SMEs, which are vital to the tourism industry, will feel some short-term loss.”

Marvin Rust added, “In the short term, we would expect a number of UK travellers originally planning a trip abroad to reconsider their travel options. This will most likely affect short term breaks where the increased check in time makes the trip less attractive. Many may therefore seek venues close to home which do not require air travel. However, history has shown that, once the “perception” that it is safe to travel returns, the tourists will come back. Clearly the downgrading of the security risk is the first step to achieving this.”
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