Ash cloud disruption brings mixed fortunes to hotels

28 April 2010 by
Ash cloud disruption brings mixed fortunes to hotels

The volcanic ash-related disruption that has shared the headlines with the election campaign since the middle of April has brought mixed fortunes for the hotel sector.

More than 95,000 flights were cancelled across Europe during the six days of disruption, with only a handful taking off and landing at UK airports. The restrictions were lifted late on Tuesday 20 April.

On the face of it, hotel guests unable to fly home would be an ideal captive audience, but many soon began to run out of money, leading to some unusual activity.

In the midst of the disruption, a cab driver revealed on BBC Five Live that he had just picked up two guests from £350-a-night Claridges and taken them to the nearest Travelodge.

Grosvenor House hotel in London provided free laundry for affected customers, while Red Carnation Hotels offered guests at its Rubens at the Palace and Hotel 41 properties free tickets to Wicked at the nearby Apollo Victoria theatre.

An Edinburgh hotel took generosity up a notch, offering 100 free rooms to people stranded in the city. Ten Hill Place, which is owned by the Royal College of Surgeons, sent two members of staff to Edinburgh airport to spread the word about the offer - no doubt a charitable move, but one that also brought positive PR.

Industry experts were split on the impact on hotel trading. Marvin Rust, hospitality managing partner at Deloitte, estimated that the lockdown generated additional revenue of around £500,000 per day for London hotels - largely driven by airport properties. He said the short-term revenue boost from guests who were unable to leave outweighed the effect of cancellations from travellers unable to get to the UK.

But Tony Burnell, relationship director at Lloyds TSB Corporate Markets, said any hopes that the disruption would boost occupancy quickly faded, particularly in the capital.

"Initially, we were seeing a favourable impact, particularly in London, as a number of visitors to the capital were unable to leave when planned. Likewise, hotels near airports experienced an increase in occupancy as a result of the volcanic ash disruption," he said.

"However, when travellers who had stayed in hotels in central London were able to move, they were not replaced by new visitors to the country."

Visit London has estimated that the disruption cost the capital £102m in lost tourist spending, with hotel occupancy down by as much as 25%, and theatres, restaurants and shops all seeing a fall in visitors.

An estimated 100,000 visitors who would otherwise have gone home remained in London, but many were cash strapped because of dwindling budgets, the tourist board said.

Early figures indicate that London hotels were attempting to make up for the hit to occupancy by raising room rates. Analysis of rates during the week of 15 to 22 April, by hotel price comparison website Trivago, shows that an overnight stay in London during the airline grounding averaged £205 a night; compared with April's expected average of £138 - a climb of 49%.

However, major operators such as Marriott and Rezidor insisted they had not raised room rates and Robert Barnard, a partner at consultancy PKF, cautioned that the true impact of the disruption will only be evident later in the year.

"As with many other businesses affected by the cloud, probably the most difficult aspect of the situation was, and still is to an extent, the uncertainty that surrounds it," he said. "This will impact the April figures - some positively, others not so. Thus we will not really be able to gauge what is happening until May.

"May, of course, is always a tricky month for hoteliers due to there being two bank holidays. Therefore, we won't really know how hoteliers are faring until we're halfway through the year."

Ash cloud boosts occupancy and revpar at London airport hotels >>

Volcanic ash cloud creates havoc for hoteliers >>

Ash cloud makes its mark on hospitality >>

By Daniel Thomas

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