Analysts PricewaterhouseCoopers (PWC) predict that revpar at UK hotels will rise 3 per cent this year and will rise another 5 per cent in 2011 as business travellers and conference bookings return.
Making a forecast for the UK hotel market for the next two years, Robert Milburn, UK hospitality & leisure leader at PWC, also said London would be leading the way in growth.
"Visibility is limited but reports of higher levels of transient visitors, more group conference bookings and a return of the business traveller (albeit slow) are all positive - especially for London.”
“Growth in the UK hotel industry reflects the Capital’s resilience to the recession. We think the worst is over and London looks set to build on its flourish in late 2009."
London hotel growth
Occupancy has grown for five consecutive months in the capital with occupancy in the final quarter of 2009 reaching 82.5 per cent.
PWC predicts that the capital will fare better than other regions with revpar expected to increase by 5.8 per cent and a further 7.8 per cent in 2011, which it believes should give hoteliers the chance to raise room rates by 3.5 per cent to an average of £120.
Liz Hall, head of hotels research, said: "Assuming the exchange rate remains favourable hotels will seem relatively good value for overseas visitors. More high spending, US tourists will continue the good news for London hoteliers.
“London’s supply constraints, and the cautious return of the private sector business traveller, competing with leisure guests for space, will drive room rates up.”
Although London's hotels could see better performance this year, PWC says that hotels outside the capital will still find 2010 tough with revpar only expected to rise by 1.6 per cent in 2010 and 3.1 per cent in 2011.
Hall added: “Occupancies should start to stabilise in early 2010 following 11 quarters of decline and room rates are forecast to start recovering from Q2 this year. Growth will be slow but it’s not all bad news with some regional centres will buck the trend.”