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2008: a "year of two halves" for hoteliers
London hotel operators experienced a "year of two halves" during 2008 according to business advisory firm Deloitte.
Up until August, hotel performance in London reported strong revenue per available room (RevPAR) growth of 7.2 per cent. Although occupancy levels fell slightly, they were still strong at 80.7 per cent. Average room rates were the main driver of the RevPAR growth, rising 7.4 per cent to £132. However, as the global economic crisis developed in September, hoteliers started to feel the effects with RevPar falling 5.4 per cent.
Daily results from STR Global (based on an inconsistent sample of hotels) show that by November RevPAR in the capital had fallen to £102. Occupancy fell 4.7 per cent to less than 80 per cent, while average room rates saw a 3.5 per cent decline to £128. December results followed suit, with RevPAR down 4.5 per cent in the first two weeks. Marvin Rust, hospitality managing partner at Deloitte said: “The first part of 2008 was strong for hotels across the UK, particularly in the capital, and hoteliers should be proud of what they have achieved in a tough operating climate. Although the last quarter results are inevitably going to be weak given the current economic environment, year-end results are expected to remain in positive territory.
For UK regional hotels, the year-to-August 2008 saw RevPAR rise 0.6 per cent to £46 as occupancy dipped to 70.1 per cent and average room rates rose to £66. Although the month of August saw RevPAR fall, it was a marginal 0.8 per cent. In September, however, RevPAR fell 3.4 per cent as occupancy dropped 3.6 per cent and November saw a 6.7 per cent decline in RevPAR. During the first two weeks of December, RevPAR outside London was down 6.5 per cent as occupancy levels plummeted to less than 5 per cent.
Rust added: "Looking ahead, 2009 will be an extremely difficult year for hoteliers in both London and Regional UK with further falls in RevPAR to come. In a downturn London is normally hit harder but with a weak currency providing some countercyclical balance and a fragile domestic economy, the capital will be the first to bounce back when recovery begins.”
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