Birmingham hotel market far from Fawlty in a tough market
THE Birmingham hotel market has demonstrated resilience in a tough year, a new study has concluded.
Hospitality and leisure sector analysts at PwC said occupancy rates rose to 61% in August 2012, which was up from 59% in the same month last year. This was despite foreign visitors being put off from visiting the UK due to the Olympics, claimed the advisor.
Data provided by STR global the average daily rate (ADR) for hotel rooms in Birmingham rose to almost £45 in August 2012, up slightly on the same month last year. Revenue per room (RevPAR) during the month also increased to £27, up from £26 in 2011.
Matthew Mullins, partner and hospitality and leisure sector expert at PwC in the Midlands, said: “It is encouraging to see that occupancy, ADR and RevPAR rates at Birmingham hotels all rose slightly in August compared to the same month last year, despite the tough trading conditions.
“Hoteliers and leisure sector investors are still contending with the aftermath of the financial crisis and have had to adapt to a lack of consumer spend. They have therefore been unable to pass price increases through the market.”
He said PwC was expecting current occupancy and ADR rates in cities like Birmingham to continue during the year ahead.
“One-off events such as the Jubilee and the Olympics have had a positive effect on London with record ADR rates but outside of the capital the impact has been more erratic,” he added.
“Coupled with the persistent wet weather in the first part of the year, demand for hotels in areas outside London has been dampened, more so for mid-range hotels rather than for those at the top and value ends of the market.”
A growing trend in London to open either high-end, boutique or branded budget hotels offering lower rates to gain market position has led hoteliers across the UK to recognise they need to differentiate their offering, he added.
“At present, the outlook for the hotel sector in cities like Birmingham in 2013 is broadly flat, with most hoteliers maintaining their current outlook. Hotels in the city therefore need to clearly identify their offering and avoid the middle ground in order to capitalise on opportunities for occupancy growth and higher revenue.”
