"Despite the impact of a challenging domestic and international economic environment; a relatively strong sterling exchange rate compared to the US Dollar and Euro; the outbreak of Foot and Mouth Disease and the atrocities of September 11, UK hoteliers have reacted swiftly to changed market conditions".
He added, "Whilst London hotels suffered an overall 12 percent fall in revPAR during 2001, this was largely the result of the dramatic revPAR declines of September (22 percent), October (35 percent) and November (27 percent). The decline of 21 percent in December represents a slowing in the rate of year-on-year decline. Hotels serving Heathrow and Gatwick airports have also suffered as a result of slowing international passenger traffic. At Heathrow, the annual occupancy of 76 percent was six percent below last year, whilst at Gatwick, the fall in occupancy was limited to three percent".
2001 annual hotel performance
UK – All Hotels: Occupancy 71% – Average room rate 74 – RevPAR 52 – RevPAR change -4.2%
UK – Regional Hotels: Occupancy 70% – Average room rate 61 – RevPAR 43 – RevPAR change 1.3%
England (excl. London): Occupancy 70% – Average room rate 62 – RevPAR 43 – RevPAR change 0.8%
Scotland: Occupancy 70% – Average room rate 57 – RevPAR 40 – RevPAR change 1.6%
Wales: Occupancy 68% – Average room rate 58 – RevPAR 39 – RevPAR change 15.8%
London: Occupancy 73% – Average room rate 107 – RevPAR 78 – RevPAR change -12.1%
Gatwick: Occupancy 83% – Average room rate 67 – RevPAR 55 – RevPAR change -4.0%
Heathrow: Occupancy 76% – Average room rate 77 – RevPAR 58 – RevPAR change -8.1%
London hoteliers continued to experience tough trading conditions, although – as forecast by Andersen in September – the rate of decline has continued to slow in December. "We are hopeful the worst is behind us", continued van Marken.
The month of December saw London hotels report a 21 percent decline in revPAR, with the top-end of the market continuing to be the sector most impacted. Further analysis suggests that some London hotels are engaging in tactical pricing to induce demand, particularly in the leisure segment.
Outside London, the regions ended the year in positive territory. The year 2001 ended with revPAR up two percent in Scotland, one percent in regional England (excluding London) and an impressive 16 percent in Wales. Welsh performance reflects the very strong trading conditions in Cardiff this year coming off a low caused by new supply. The National Stadium in particular has been a major boon to Cardiff hoteliers. Indeed in December, Welsh revPAR is reported up 8.6 percent as a result of an increase in both average room rate and occupancy. And in Scotland, overall revPAR results in December were up 8.5 percent, in this case almost entirely due to increased demand.
Marvin Rust, Partner, Hospitality and Leisure, comments that, "For many, eyes will remain focused on London. Until demand picks up in the capital, and the fear of a price war abates, investors will be concerned about the loss of value from their hotels. But hotel guests will enjoy better value for money than for some time!"
Theodore is the Co-Founder and Managing Editor of TravelDailyNews Media Network; his responsibilities include business development and planning for TravelDailyNews long-term opportunities.
