Hotels see September dip against last year – but 2009 could be worse

The latest monthly figures from PKF Hotel Consultancy Services show UK hoteliers experienced a decline in visitor numbers in September. Room rates also declined as a result of some softening in demand, as the fallout from the turmoil in the markets affected business travel.

In the regions, occupancy dropped 3.4% from 78.9% to 76.3%, while room rate was down 0.3% on September 2007. In turn, rooms yield dropped from £60.72 in 2007 to £58.49 this year.

In London, room rate was down 1.5% on the same time last year from £149.13 in 2007 to £146.92 this year. Occupancy nevertheless was at 81.6% for the capital, but this was still down 5.7% on the same time last year and as a result, rooms yield declined from £128.95 in 2007 to £119.83 in 2008 – a fall of 7.1%.

However, both Manchester and Liverpool achieved growth in rooms yield – Liverpool by 2.4% and Manchester by 2.7%. This is probably a reflection of Liverpool’s 2008 status as European Capital of Culture bringing visitors to both the cities’ hotels.

Robert Barnard, partner for Hotel Consultancy Services at PKF said, ‘The decreases that hoteliers experienced this month are not surprising given the current turmoil in the markets which is undoubtedly affecting business travel.

‘However, it should also be noted that hoteliers did have a particularly strong September in 2007 and this goes some way to explaining some of the decreases.

‘Overall, it is important to note that despite the drops, occupancy levels, as well as room rate and rooms yield figures, are still fundamentally healthy due to two strong years of growth in 2006 and 2007 and hoteliers are therefore in a good position to weather the current climate.’

However, Niels Pedersen, managing director of the London-based Supranational Hotels consortium forecasts tougher times ahead for hotels in 2009.

He believes revenues at four-star properties will be down by a quarter, with three-star hotels dropping by 10-15%, and budget hotels remaining static.

He warned the industry that the prospects will be even worse than the gloomiest pundits imagine because of a probable background of redundancies, VAT and tax increases, and salary cuts.

The ‘survival of the fittest’ philosophy will mean that up to 10% of properties will go bust, be sold, or change use.

He believes hotels will have to offer better value rather than marketing on price alone because corporate guests won’t accept second rate service even when spending less. The business travel market will go back to basics, with shorter stays to avoid time-wasting, and no place for accompanying spouses.

Pedersen said: ‘Nowhere is safe because the hotel industry is now having to pay for average price increases of 40% over the last three years. Survivors are learning to fight for every single extra guest.’

Visit www.pkf.co.uk/hotelcons for a more detailed breakdown of September’s figures.

To find out more about the Supranational Hotels consortium visit their website www.snrhotels.com.