UK hotels face falling demand

UK hoteliers saw visitor numbers decline in September and, as a result of some softening in demand, room rates have declined as the fallout from the turmoil in the markets affected business travel, according to preliminary monthly figures released by PKF Hotel Consultancy Services. The decreases were relatively small so fundamental occupancy levels still remain strong across the majority of the country.

In London, room rate was down 1.5% on the same time last year from £149.13 in 2007 to £146.92 this year. Occupancy nevertheless was at 81.6% for the capital, but this was down 5.7% on the same time last year and as a result, rooms yield declined from £128.95 in 2007 to £119.83 in 2008 - a fall of 7.1%.

In the regions, there was a similar story as occupancy dropped 3.4% from 78.9% to 76.3%, while room rate was down 0.3% on September 2007. In turn, rooms yield dropped from £60.72 in 2007 to £58.49 this year.

Cardiff experienced the largest falls in the survey with rooms yield down 15.9% from £66.26 last year to £55.73 this year. The main factor behind the drop was the 14.6% fall in room rate, occupancy only fell 1.5%. The falls can be explained in part because last year Cardiff played host to a number of the Rugby World Cup matches which boosted the city’s hotels.

In contrast, both Manchester and Liverpool achieved growth in rooms yield - Liverpool by 2.4% and Manchester by 2.7%. This is probably a reflection of Liverpool’s 2008 status as European Capital of Culture bringing visitors to both the cities’ hotels.


Robert Barnard, partner for Hotel Consultancy Services at PKF, commented, “The decreases that hoteliers experienced this month are not surprising given the current turmoil in the markets which is undoubtedly affecting business travel.

“However, it should also be noted that hoteliers did have a particularly strong September in 2007 and this goes some way to explaining some of the decreases.

“Overall, it is important to note that despite the drops, occupancy levels, as well as room rate and rooms yield figures, are still fundamentally healthy due to two strong years of growth in 2006 and 2007 and hoteliers are therefore in a good position to weather the current climate.”