The UK hotel industry’s 2006 resurgence was firmly ratified over the summer as the sector recorded its best ever performance figures since the Millennium.Robert Barnard, partner for hotel consultancy services at PKF, takes a look at how hotels around the UK shone during one of the UK’s hottest summers.
After a strong start to 2006, the London hotel market took off over the summer months of June, July and August. While rooms yield improved across all segments of the market, luxury, first class and boutique hotels performed particularly well with Year to Date increases on 2005 reaching 20.1%, 22.6% and 21.0% respectively. The first class and boutique hotels also achieved the highest increase in occupancy during the year with average occupancy up 17.7% for first class hotels and 13.9% for boutiques.
Over the summer months, London hotels were boosted by a number of major events such as the London Venue Expo exhibition, EuroPride London and the London Dance Week Festival in June; The Wimbledon Championships, the British International Air Show and The Farnborough Air Show in July; and The Proms and the Great British Beer Festival in August. The summer opening of the State Rooms at Buckingham Palace and the Houses of Parliament summer opening also brought tourists of all nationalities to London.
Although some of the staggering performance figures such as the 26.3% increase in occupancy in August should be viewed in the context of the aftermath of the 7/7 bombings in 2005, nothing can detract from the innate strength and impressive performance of most hotel market segments.
Domestic visitors returned to London during the summer of 2006 reviving the fortunes of tourist hotels (under £75 average room rate) whose rooms yields increased by 7% in June, 21.8% in July and 32.4% in August. The percentage of European visitors staying in tourist hotels also rose by 23% in July and 3.8% in August while North American visitor numbers to London hotels were also boosted in July by 34.9% (first class), 22.5% (business) and 31.6% (tourist). In contrast, the number of Japanese tourists staying in all classes of London hotels fell during the summer months with the exception of an increase of Japanese visitors to de luxe hotels in June.
Compared to the record-breaking figures for London hotels, regional hotel performance overall improved at a more modest and stable rate over the summer although locations such as Aberdeen, Bournemouth and Heathrow & Slough had a sizzling summer.
Major local events such as the Highland Games in June and the Edinburgh Festival in August ensured a strong performance for Scottish hotels while the 2006 British Open Golf helped Liverpool hotels to raise their room rates by a third in July.
Not surprisingly, given the long run of hot weather, Bournemouth hotels had a great summer - largely as a result of high occupancy rates throughout the period and increases in room rates of 12.5% in June, 10.8% in July and 8.7% in August. Events such as the Bournemouth Live! Festival and annual trade union conferences in June followed by the school holidays kept the town’s cash registers ringing throughout the season.
Airport locations such as Heathrow and Gatwick were more than 90% full during June and July and Heathrow hotels also managed to increase their room rates by 8.6% in July to £73.82. The airport terrorist scares in early August also helped to raise occupancy levels in hotels at Heathrow, Gatwick and Birmingham airports during the month.
Robert Barnard, partner for hotel consultancy services at PKF, said: “The summer of 2006 will be remembered by most UK hoteliers as a good one albeit for different reasons. For seaside resorts, the long, hot summer helped to keep domestic holidaymakers in the UK; the delays created by the terrorist bomb alerts generated additional August income for airport hotels; while major cultural and sporting events throughout the summer brought visitors to all corners of the UK.
“The significance of breaking through the performance markers set in the Millennium year cannot be underestimated. Hotel Britain has had to weather some extremely difficult trading conditions since that time but it has come through with flying colours - testament to the resilience of our hoteliers, the professionalism of management and the UK’s inherent appeal from both the business and tourism perspectives. The key issue now is, of course, how long can this be sustained? “