Hotels see recovery in 2010 but future ‘stubbornly turbulent’

UK hoteliers saw a significant recovery in 2010 but most of the upturn was attributed to London, a new report says.

According to Hotel Britain 2011, accountants and business advisory firm PKF’s guide to the performance and prospects of the UK hotel industry, UK hotels saw rooms yield rise by 7.6% to £72.20 last year, representing an annual growth rate of 1.1%.

Occupancy levels also increased by 2.6% to 74.5%.

In London, room occupancy increased by 1.7% to 82.7% and average room rates  increased by 10.6% to £144.64. 

There was also an increase in rooms yield of 12.5% to £119.57 when compared to 2009, and over the last five years rooms yield witnessed an annual growth rate of 4.6%.

Despite regional hotels achieving an annual occupancy of 70.5% up 3.1% compared to 2009, they recorded a negative occupancy compound annual growth rate of -1.0% over the five years. 

Average room rates continued to be under pressure and was down 0.9% to £69.56.

Overall, the regions managed positive annual growth in yield for 2010 at 2.2%.

Leeds posted a negative rooms yield growth of 1.4% due to a reduction in average achieved room rate of 3.9% to £62.50 as occupancy increased by 2.6%.

PKF said the city may well benefit from the high speed rail link planned to start construction in 2017, which will connect London to Leeds, Birmingham, Manchester, Glasgow and Edinburgh.

Paul Clarke, partner at PKF, said: “London hotel performance improved substantially in 2010 when compared to 2009, despite the ash cloud which closed most of Europe’s air space for six days in April, and the extreme winter snow which caused extensive travel disruptions.

“By contrast, the picture in the regions is less rosy largely due to corporate belt-tightening with business travel and accommodation budgets remaining strictly controlled. 

“This particularly impacted the meetings, incentives, conference and events (MICE) market; although there were signs towards the end of the year that the situation was changing with a zest for meetings and events in regional hotels returning.”

Looking to the future, Hotel Britain 2011 predicts continued uncertainty for the UK hotel market with much depending on the outcome of wider global issues such as increasing oil prices, economic and financial scepticism, and events in the Middle East, North Africa and Japan.

Mr Clarke added: “The road ahead for the UK hotel market remains stubbornly turbulent and will continue to be impacted by broader worldwide issues. 

“We expect London to remain stable with some anticipation of growth especially as it benefits from the build up to the Olympic Games, the Royal Wedding and the Champions League Final. 

“The recovery of the performance in the regions will, however, continue to be slow and dependent on growth in the MICE and corporate markets.”