Hotel market recovery delayed to 2011, say execs

09-Mar-2010 - Last updated on 11-Mar-2017 at 21:23 GMT

Related tags Room rates

54% of hotel execs think we will have to wait at least a year before we see recovery in the market

A survey of hotel executives has shown that more than half aren't expecting to see a recovery in the market until 2011 and the same number think that it will take even longer for room rates to be restored to the same level they were before the recession struck

Just 2 per cent of the 155 hotel executives surveyed by law firm DLA Piper for its European Hospitality Outlook Report 2010 said they expected to see an upturn in business this year, compared to 54 per cent who said it will be 2011 before we can expect to see solid growth in the sector and 32 per cent who predict it will be 2012.

However, despite many putting forward a cautious outlook, there are some areas of the industry executives think will prosper this year. Budget (35 per cent) and mid-market hotels (33 per cent) were seen as the most attractive opportunity for investors and 73 per cent of respondents said they think it will be a good year for joint ventures.

Room rates

“The largest chains will continue to gain share through greater opportunities to convert smaller chains and the advantages that their operational efficiencies and marketing budgets give them,” said Karen Friebe, global co-chair of DLA Piper’s Hospitality and Leisure Practice.

“But, while there are signs that occupancy levels have stabilised, there is growing concern throughout the industry that room rates will remain low for years to come and conversions are unlikely to compensate for reduced new build activity.”

The decline in room rates has had the biggest impact on business over the past year, according to 45 per cent of respondents and 54 per cent believe we will have to wait until 2012 before room rates are restored to pre-recessionary levels.

Despite the gloomy outlook, when asked about the past three months of business, 36 per cent of respondents said they had seen a 'slight increase' in business travel and 31 per cent said they had seen the same increase in leisure travel.