Hotels sector to feel the pinch in 2013 warns PwC

BIRMINGHAM’S hotel sector is facing the squeeze despite a strong end to 2012, hospitality analysts have said.

Occupancy rates rose to 63.9% in December 2012, up from 59.2% in the same month of 2011, according to data provided for PwC by STR global.

PwC said despite concerns that weaker economic prospects were likely to dampen performance in the sector in 2013, the latest data showed that regional hotels benefited from a solid finish to 2012.

The average daily rate (ADR) of hotel rooms in Birmingham fell slightly to £50.05 in December 2012, down from £51.93 in the same month of 2011.  Revenue per room (RevPAR), however, increased year-on-year to £32.00 from £30.74 in December 2011.

Owen Mackney, partner and hospitality and leisure sector expert at PwC in the Midlands, said: “Nationally, we are expecting another challenging year for the hotel sector and, to some extent, the weak economic outlook is likely to affect regional cities like Birmingham more than London.

“However, the data for the last month of 2012 is on the whole positive and demonstrates how hoteliers in Birmingham have been successfully bucking the trend by improving their occupancy and RevPAR rates.”

Commenting on expectations for 2013, Mr Mackney said that while the solid finish to 2012 may have boosted hoteliers and leisure sector investors’ confidence for the short term, it was unlikely this trend would continue for the remainder of 2013.

“This is due to a number of factors including the weaker economic outlook and the fact that 2012 was the second wettest year on record, which is expected to encourage more people to holiday abroad this year. That said, a weaker pound could be advantageous to UK tourism as a whole,” he said.