London hotel market worst in 15 years, says report
London hotels face the worst economic conditions in 15 years, according to a new report by consultancy PriceWaterhouseCoopers.
The report reveals that London revenue per available room (revpar) is set to fall almost 12% in 2009, from £94.28 in 2008 to £82.92 in 2009, as companies cut costs and consumers spend less.
In the last five years UK hotels have seen unprecedented revenue and room rate growth, but occupancy rates have been sliding since September and the rate of decline is expected to be worse next.
Robert Milburn, UK and hospitality & leisure leader at PWC, said: "The ricochet from continuing turmoil in the financial markets, the sharp global economic slowdown, and the negative consumer and corporate sentiment means that the outlook for travel and hotel demand has deteriorated significantly in recent weeks. But the outlook for 2009 is even more worrying.
"Occupancy in London looks set to drop to 70% next year the capital has not seen a decline on this scale since 9/11, and before that 1991 when they fell as low as 65%."
PWC's has based its predicted figures on a 0.5% in Gross Domestic Product, but warned that if the UK enters into a harsher recession the outlook is "even starker".
The consultancy added that the current recession differed from the UK-specific downturn of the 90s in that it was of a more global nature, meaning that travel to the UK from abroad would be more likely to suffer.
Liz Hall, head of hotel and leisure research said that there would be more deals in January next year as hotels try to persuade customers to "venture out".
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By Gemma Sharkey
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