The industry experts have predicted a 0.8 per cent increase in inbound visitors to the UK, coupled with a robust leisure demand and weak pound, will see RevPAR in London hotels increase by 2.5 per cent in 2010.
The prediction will be a result of a rise in occupancy of 1.5 per cent, and an enhanced room rate of 0.6 per cent.
Tough year for regional hotels
Hotels in the regions however are predicted to experience a ‘tough year’, as domestic consumers continue to restrict their spending.
Pressure from consumers for regional hoteliers to reduce their room rates will result in a 1.6 per cent decline on 2009 levels, and while occupancy is pegged to stabilise with a 0.1 per cent increase, RevPAR is expected to decline by 1.4 per cent.
Johnathan Langston, managing director of TRI, said: “Historically, the UK provincial hotel market has experienced a lag in recovery, relative to GDP recovery. It is likely that corporates will continue to operate on tight accommodation/travel budgets, with little or no scope for hoteliers in the provinces to enhance rate to the commercial sector.
“However, our analysis also indicates that London hoteliers have the ability to adjust fixed costs more quickly in response to changes in revenue performance, whereas provincial hotels have been less able to mitigate falls in revenue with cost reduction.”
Recovery for hotels in the regions is expected to begin in 2011, although at a slow rate. While TRI believe occupancy levels will increase steadily, an average room rate recovery will be gradual, resulting in an increased RevPAR of 1.9 per cent on 2010.
London hotels will however see further growth through 2011, with an occupancy increase of 0.7 per cent, and a 2.6 per cent rise in room rate, resulting in an overall RevPAR growth of 3.5 per cent.