BHA annual report reveals challenging year for hotels - could 2012 be the turning point?

08-Dec-2011 - Last updated on 26-Apr-2021 at 20:03 GMT

Related tags Bha chief executive Hotel Bha

Travelodge is one of the budget hotel chains that has continued to expand with its aggressive growth strategy

The perfect storm of the financial crisis, high rates of VAT and planning delays took its toll on the hotel sector in 2011, with 36 per cent fewer hotel rooms opening than predicted at the start of the year.

According to the annual publication of the British Hospitality Association (BHA) - British Hospitality: Trends and Developments 2011 - 106 hotels have opened so far this year (11,800 rooms), significantly lower than the 18,838 rooms it forecast would open in last year’s Trends and Developments report.

“This year’s actual total suggests the scale of difficulties in fundraising as well as in planning problems and developers going into administration,” said BHA chief executive Ufi Ibrahim.

“However, only some of these projects have been lost; our forecast for 2012 - 21,500 - includes many of the projects postponed from 2011 with some even moving into 2013.”

Barriers to growth

Ibrahim went on to insist that the key to the industry’s future is to remove some of the barriers to growth, the main one being the high rate of VAT.

“This is making the UK uncompetitive with much of Europe,” she added. “Certainly, only through reasoned argument and discussion will the industry’s case be considered.”

Other key findings contained within the BHA report include: -

Over half (55 per cent) of the new hotels are in the budget hotel sector. Over 7,100 new budget hotel rooms were added in 2011 and 14,575 are forecast for 2012
The hotel industry is continuing to be a tale of two markets. Hotels in London have had 81.8 per cent occupancy for the year to September 2011 at an annual room rate (ARR) of £107.72, while hotels in the regions are lagging behind with 70.5 per cent occupancy at an APR of £48.27.
The number of hotel insolvencies has risen in the past year, with 273 hotels going into insolvency compared with 259 in 2010.

The catering sector

Meanwhile, the catering sector appears to be weathering the storm as figures show that the number of meals served continued to increase and the number of restaurant insolvencies dropped.

Peter Backman, managing director of Horizon, agrees that the foodservice sector is generally doing very well against a difficult financial backdrop.

“It has kept volumes up and is throwing up some innovative brands while hopefully, making itself fit for the upturn – when it arrives."