UK Hotel Room Rates Climb
But How Long Will The Good Times Last?
MARCH 8, 2007. The UK hotel sector is set for two more good years ahead with room rates in luxury London hotels approaching lb360 a night by 2008, according to PricewaterhouseCoopers LLP 'Hospitality Directions Europe - UK Hotel forecast' released today.
The strong economic performance of the UK, robust corporate travel demand, minimal discounting of room rates by hoteliers and booming real estate prices will result in further room rate increases this year and in 2008.
Revenue per available room (RevPAR) for luxury hotels in London is forecast to grow by 10.6 per cent this year. Overall for the UK RevPAR is forecast to grow by a less spectacular but still solid 5.5 per cent this year and 5.6 per cent in 2008 taking UK RevPAR levels to lb64.16 in 2007 and lb67.77 in 2008.
Liz Hall, head of hospitality research and editor of 'Hospitality Directions Europe,' PricewaterhouseCoopers LLP, comments: 'The good times will continue through to 2008, but at a slower pace despite a great start to 2007. And with 83.5 per cent hotel occupancy in London, the capital is nearly full.'
PricewaterhouseCoopers forecast is underpinned by strong economic growth with the UK expected to see the strongest growth of the G7 this year at 2.7% and further growth in 2008. This growth is largely driven by corporate spending with consumer spending lagging somewhat.
Robert Milburn, UK hospitality and leisure sector leader, PricewaterhouseCoopers LLP adds 'Developers and investors are taking advantage of the strong market to introduce new brands and deliver new products. The extended stay product which has been very successful in America is coming to the UK and Europe and we are going to see more international and domestic brands entering the UK market.
'And for the first time in a while we are seeing a high level of new-build activity. There is a risk however, that many of these new introductions may hit the market just when the cycle slows and increases in competition and supply in some cities may, in due course, exacerbate a trading slowdown. Despite consumer spending concerns, travel and holidays remain an essential lifestyle component for many people and travel demand continues to grow - globally and to the UK. The domestic travel outlook may benefit from calls to holiday at home and a recent report suggests three per cent of people in the UK have given up air travel.
Liz Hall, head of research and editor of 'Hospitality Directions Europe,' PricewaterhouseCoopers LLP adds: 'There is a lot of uncertainty across the world and external industry events can impact heavily as we have seen in the past. 'The going will not necessarily be easy. Competition between destinations and hotels is going to get tougher - hotels need to ensure their pricing and service offerings are inline.'
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