London continues to rank alongside Paris and Rome as one of Europe’s top city destinations, having shrugged off the effects of the 2005 terrorist attacks and competition from increasingly popular destinations in Eastern and Central Europe.

This is according to new figures released today in PKF Hotels Consultancy’s annual report, Country Trends 2007.

The PKF report, an analysis of the performance of 888 hotels across the UK, Europe, Middle East and Africa, reveals that London hotel occupancy grew by 7.7% in 2006, the year after the terrorist attacks on the Capital, with average rooms yield also growing by 15.9% as hoteliers were able to charge an average £109.97, an extra 7.6% more per room.

PKF’s monthly hotel trends data shows that the Capital’s hotels have continued to perform well in the first three quarters of 2007 with room rates rising a further 9.0% although occupancy increased by only 0.5% on the same period of the previous year.

Paris outperformed both London and Rome with occupancy rising 6.3% and room rates up 19.4% giving a 27.0% increase in rooms yield. Occupancy and rates in Rome were up 5.5% and 3.5% respectively giving a 9.2% improvement on yield. However at €271.42, Rome’s average room rates remain more than €75.0 higher than Paris.

Robert Barnard, PKF’s Partner for Hotels Consultancy Services says: “Like Paris and Rome, London has continued to draw in the crowds because it has a well established tourist product with world class hotels, ‘must-see’ destinations and a programme of international events. The city is geared up to delivering a great tourist experience and continues to do so regardless of any perceived terrorist threat or competition from other global destinations.

“Cheap travel options and the existing tourism infrastructure, with a mix of facilities for both business and leisure travellers, keeps demand for these cities high. I am confident that London will continue to post impressive results and remain a top performer in future years.”

However, competition for London hotels is increasing from Middle East and African cities, such as Muscat and Cairo, which benefit from low costs and have deliberately focused on tourism to diversify their economies. Muscat rooms yield increased by 25.5% due to a 29.8% increase in room rates while Cairo yields increased 18.8% based on a 14.9% hike in rates and 3.3% greater occupancy.

The emergence of Eastern European cities and the absorption of room supply by many Central European cities are enabling the hotels to deliver impressive results. Moscow rooms yield improved 18.8% based on 20.5% higher average room rates while Warsaw’s occupancy and rates rose 8.2% and 4.5% respectively resulting in a 13.1% lift for yields. The improving political environment and transport infrastructure have played a part in the better performance of former Soviet bloc cities.

Robert continued: “The rise of cheaper air travel and more resilience to geopolitical events as well as fewer entry restrictions will increase demand for many cities including those outside Europe as tourism promotion rises up many governments’ agendas. Cities are playing to their strengths and taking whatever steps are necessary to attract both business and domestic travellers. The hotel sector is likely to become even more competitive.”
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