Regional UK hotels set to recover ahead of those in the capital

Hotels in Birmingham and the regions are set to recover ahead of those in London according to the latest research from business advisory firm Deloitte.The Hotel Market Outlook report suggests that while the remainder of 2009 will be difficult for the UK hotel industry, the prospects for 2010 are brighter.

Hotels throughout the UK are likely to report declines in revenue per available room (revPAR) for the final two quarters of 2009 but revPAR should improve, particularly in the regions, during 2010.

According to the report, regional hotels will see occupancy and average room rates starting to improve during the last six months of the year and hotels will start to recover in the first quarter of 2010, one quarter earlier than previously forecast. Each quarter, thereafter, is expected to report growth in excess of five per cent, with year-end 2010 revPAR growth of 5.1 per cent.

RevPAR in London will continue to decline for the rest of 2009 as occupancy levels hover between -0.3 per cent and 0.3 per cent against the comparable 2008 figures, average room rates are, and will be, the main culprit behind further revPAR declines.

By the end of 2009, revPAR in the capital is expected to have fallen by 8.9 per cent and looking further ahead to 2010, London will continue to suffer with revPAR declines continuing until Q4 2010. But by year-end, things will be looking brighter with revPAR down for the whole of 2010 by just 0.6 per cent.

Alistair Pritchard, head of Deloitte’s Tourism, Hospitality and Leisure practice in the Midlands, said: “This will be welcome news for hoteliers in Birmingham as the revised forecasts show that for hotels across the UK’s regions, the worst falls in revPAR are probably behind us now.

“But there will be further falls in revenue before recovery takes place. With the VAT rate increasing to 17.5 per cent in January, margins are likely to be placed under further pressure and the risk must be for a delay to revPAR growth in the regions as hoteliers absorb some or all of the VAT increase in the short term.”

ENDS

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