Weak pound to cheer gloomy hotel outlook

The UK hotel industry is set for another difficult year ahead, although a number of international events and the decline in the value of Sterling may soften the impact, according to Hotel Britain 2009, the latest report on the performance and prospects of the UK hotel industry from PKF.
The report reviews the performance of 548 hotels representing over 88,000 rooms across both London and the regions.

According to Robert Barnard, Hotel Consultancy Services Partner at PKF Accountants & business advisers, UK hotels face a challenging year in 2009 due to the deepening economic downturn. However, exceptional growth in the market over the last five years does give the industry a strong starting point and international events, new concepts and further investments may soften the impact.

Robert said, “There is no doubt that there are challenges ahead, but while this 2009 edition of Hotel Britain is the gloomiest yet, there are important positives to remember.

“The UK is hosting a number of international sporting events in 2009 such as The Ashes and the ICC World Twenty20 and these may boost UK visitor numbers.

“Equally, Sterling has dropped to record lows against the Euro and the US Dollar and this should encourage visitors from both Europe and North America who, in the last few years, have avoided the UK due to the strength of Sterling.


“The North American visitor market to the UK may also be buoyed on two fronts by the appointment of new USA President Barack Obama: firstly, because we are no longer in an election year when most Americans tend not to travel; and secondly, by aiding consumer confidence which may encourage people to travel.

“Finally, while the luxury sector is slowing, the budget end of the spectrum is still reporting positive results and both Premier Inn and Travelodge have aggressive development plans for 2009.”

2008 Hotel Performance

UK hotels saw rooms yield fall from £74.33 in 2007 to £74.10 in 2008. Occupancy was also down - it dropped 2.5% to 73.9% - but in contrast, AARR increased by 2.3% to £100.33 across the UK as a whole.

In London, AARR increased year on year by 3.8% to £140.56 and this pushed rooms yield up by 2.0% to £112.74. Occupancy was down by 1.7% to 80.2%.

Hotels in the regions reported negative growth with rooms yield down 2.4% on 2007 to £53.55. Occupancy also fell, down 2.9% to 70.5%, but AARR managed a small increase of 0.5% to £75.99.

While regional UK overall did not have as strong a year as 2007, there were two cities which bucked this trend: York and Liverpool. Provisional figures indicate that European Capital of Culture in 2008, Liverpool, received a record number of visitors in the year. The city had the highest occupancy growth of the 23 regional cities in 2008, jumping 6.0% year on year to 77.9%.

York had an equally impressive year and posted one of the highest occupancy levels in 2008, up 3.2% to 80.8%, higher than London hotel occupancy levels.