Hotels’ double-digit growth won’t last, say experts

By Becky Paskin

- Last updated on GMT

Related tags Hotel Deloitte

The re-opening of luxury hotels like The Savoy may dampen hoteliers' performance in 2011
The re-opening of luxury hotels like The Savoy may dampen hoteliers' performance in 2011
Hotels across the UK delivered double-digit revPAR growth in the third quarter of the year, although experts warn the positive performance will not last into 2011

According to latest figures from STR Global, London hoteliers saw revPAR rise 19.8 per cent in Q3 to £117, a £19 lift on the same period last year.

And while those hotels in the capital continued to fair better than their regional counterparts, provincial hotels also saw a double-digit revPAR growth of 10.8 per cent, to £49, a £4 rise on 2009.

However, in its quarterly Hotel Market Outlook report, business advisory firm Deloitte warns the positive growth seen so far this year will not be carried through into the next.

Weaker performance ahead

Marvin Rust, hospitality managing partner for Deloitte, said hoteliers expecting a strong run during 2011 may be “disappointed.”

 “We expect London hotels to see revPAR fall 5.2 per cent next year with occupancy and average room rates falling 3.2 per cent and 2 per cent respectively. There are clearly a number of challenges for hoteliers in 2011, including it being a non-Farnborough Air Show year, the year before the Olympics and the supply of luxury hotels in the capital expanding with the reopening of The Savoy and the Four Seasons. 

“On a more positive note, the rate of appreciation of sterling against both the Euro and Dollar looks to be overstated, meaning the UK should remain attractive as a destination for overseas visitors. For 2010 we have led the bulls and still expect the year to end with close to 10 per cent gains in revPAR.”

Double-dip recession?

The analysis comes as economic forecaster Ernst & Young ITEM Club today dismissed fears of a double-dip recession.

The group claims that while the economy’s recovery is slowly losing momentum, the likelihood of a double-dip has been “exaggerated”.

Peter Spencer, chief economic adviser to the Ernst & Young ITEM Club, said: “The economy is likely to slow over the winter following a surprisingly positive first half of the year, but I think this will be a soft-patch, not a double-dip.”

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