Brightening outlook for the hotel market

A recently published Hotel Market Outlook by Deloitte, a consultancy, for the fourth Quarter of 2009 has some good news all round for the hotel sector’s performance in 2010. Last year’s trend of decline is set to be reversed with revenue per available room (revPAR) set to rise both in London and in the regions.

London hotels have shown the strongest performance with revPAR already displaying positive growth in the last quarter of 2009. With occupancy growing an impressive 7.1% during the quarter, revPAR was up by 7.4%. This growth means that 2009 saw a smaller than predicted contraction in the market with revPAR declining by 3.9% overall (as opposed to the predicted 6.5%).

Performance this year is set to be very buoyant with analysts predicting double-digit revPAR growth of 12.8% for 2010, driven mostly by average room rates, which are expected to rise by £10 on average. Meanwhile, occupancy is expected to reach a high of 87.2% in the third quarter of 2010.

The regional market has not been performing as strongly with the fourth quarter of 2009 still seeing a drop in revPAR, bringing the year’s decline to 10.4%. However performance is set to improve in 2010 with a strong start predicted, which will continue throughout the year. The analysts warn that it will take until the third quarter of 2010 for any meaningful growth in average room rate, however; revPAR for 2010 is expected to grow by 6.5% overall.

The outlook is positive mainly due to the continued weakness of the sterling against other currencies (notably the euro and the dollar), which continues to make the UK a very attractive destination.