Hotel rates to pick up late next year

Hotel rates to pick up late next year

UK hotels suffered another bad month of falling rates, yields and occupancy in August.

In London, room rate was down 7% year-on-year to £102. Occupancy fell by 2.3% to 81.8% and yield fell by 9.2% to £83, according to a report by hotel consultancy services PKF.

However, a separate report by Deloitte predicts that there will be a slowdown in the rate of decline with a pick up in the last three months of next year.

Marvin Rust, Hospitality Managing Partner at Deloitte said: “The revised forecasts show that for hotels in London and across the UK, the worst falls in revPAR are probably behind us now.

“However, both sectors still face further falls in revenue before recovery takes place.

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I would not be surprised to see a return to growth in the capital ahead of Q4 2010.”

Rust predicted that the rest of this year and the beginning of next would be tough for hoteliers:

“With the VAT rate increasing to 17.5% in January, margins are likely to be placed under further pressure and the risk must be for a delay to revenue per available room (revPAR) growth in the regions as hoteliers absorb some or all of the VAT increase in the short term.

However, he predicted London would be less affected – if the pound stay weak.

In the regions, occupancy rates are starting to creep back up. Edinburgh saw a 3% increase in occupancy rates in August compared to last year, to 91%. However, rates were down by 7%.

Leeds and Liverpool also saw their occupancy levels increase, by 3% and 7.6% respectively. However, both cities saw sharp falls in yields.

Robert Barnard, partner for Hotel Consultancy Services at PKF, said: “This year was always going to be a tough one for hoteliers and therefore these figures are not hugely surprising.

“It is heartening to see that occupancy rates are creeping back up in many of the cities.

“But, ultimately, if hoteliers can continue to draw in visitors, they will be in a better position to slowly increase room rate as soon as the economic situation allows them to.“