 2010 sees significant recovery for UK hoteliers
UK hoteliers saw a significant recovery in 2010 following the challenges of 2009, according to Hotel Britain 2011, PKF’s definitive guide to the performance and prospects of the UK hotel industry.
The report reviews the performance of 549 hotels representing over 92,117 rooms across both London and the regions.
Robert Barnard, Hotel Consultancy Services Partner at PKF Accountants & business advisers, acknowledges that while this is positive news, much of this upturn is attributed to London which still remains the power house behind the UK hotel industry.
Robert says: “London hotel performance improved substantially in 2010 when compared to 2009, despite the ash cloud which closed most of Europe’s air space for six days in April, and the extreme winter snow which caused extensive travel disruptions.
“In the first half of the year, London benefited from the weak pound which encouraged overseas visitors to the UK and boosted a demand for accommodation in the capital. This led to room yields increasing by 12.5% on 2009 to £119.57 – the highest they have been for the five year period under review. And during the second half of 2010, the biennial Farnborough Air Show and a pick up in corporate and event business resulted in London posting an average of 92% occupancy for the month of July.
Robert adds: “By contrast, the picture in the regions is less rosy largely due to corporate belt-tightening with business travel and accommodation budgets remaining strictly controlled. This particularly impacted the meetings, incentives, conference and events (MICE) market; although there were signs towards the end of the year that the situation was changing with a zest for meetings and events in regional hotels returning.
“Countrywide, England and Scotland achieved rooms yield growth of 2.7% and 1.1% respectively while Wales was down 0.4% due to an annual drop in occupancy of 0.7%.”
Looking to the future, Hotel Britain 2011 predicts continued uncertainty for the UK hotel market with much depending on the outcome of wider global issues such as increasing oil prices, economic and financial scepticism, and events in the Middle East, North Africa and Japan.
Robert Barnard concludes: “The road ahead for the UK hotel market remains stubbornly turbulent and will continue to be impacted by broader worldwide issues. We expect London to remain stable with some anticipation of growth especially as it benefits from the build up to the Olympic Games, the Royal Wedding and the Champions League Final. The recovery of the performance in the regions will, however, continue to be slow and dependent on growth in the MICE and corporate markets.”
2010 hotel performance
UK hotels saw rooms yield rise by 7.6% to £72.20. This represents a compound annual growth rate (CAGR) of 1.1%, and reflects some stabilisation following the peaks and troughs of the five year cycle. Occupancy levels also increased by 2.6% to 74.5%.
In London, room occupancy increased by 1.7% to 82.7% and average achieved room rate (AARR) increased by 10.6% to £144.64. There was also an increase in rooms yield of 12.5% to £119.57 when compared to 2009, and over the last five years rooms yield witnessed a CAGR of 4.6%.
Regional hotels achieved an annual occupancy of 70.5% up 3.1% compared to 2009. However, they recorded a negative occupancy CAGR of -1.0% over the last five years. AARR continued to be under pressure and was down 0.9% to £69.56. Overall, the regions managed positive annual growth in yield for 2010 at 2.2%.
Hotel Britain 2011 costs £200 via PKF’s website at www.pkf.co.uk/hotelbritain
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For further information or to arrange an interview with Robert Barnard contact Claire Dee at Claire Dee Communications on 07798 894520 or claire.dee@clairedeecommunications.com
Notes to editors
1. Hotel Britain is compiled from the responses of a representative cross-section of 549 hotels representing 92,117 rooms. 133 of these hotels are located in the capital and 416 are spread across the rest of the country. It is the most comprehensive guide to the performance and prospects of Britain’s hotel industry.
2. PKF (UK) LLP has been providing hotel consultancy services since the early 1970s and, in that time, has undertaken thousands of assignments throughout Europe, the Middle East and Africa and further afield. Services include: market evaluation and financial feasibility studies; operational and profit improvement reviews; asset management; business valuations; international property services; corporate strategy and planning; litigation support. PKF’s website features regular articles from the firm’s hotel consultancy services experts on industry topics: www.pkf.co.uk/hotelcons
3. Definition of the key terms are given below:
- Room occupancy: the ratio of total occupied rooms to total available rooms.
- Average achieved room rate (AARR): rooms revenue divided by the total number of guest rooms occupied during the year.
- Rooms yield: room occupancy multiplied by the average achieved room rate (also known as RevPar).
4. PKF (UK) LLP is a leading firm of accountants and business advisers with more than 1,500 partners and staff operating in 23 offices in the UK mainland firm, incorporating a wholly-owned financial planning company and associated offshore practices. The firm specialises in advising growing and entrepreneurial/owner-managed businesses, AIM and fully listed companies, and also has extensive experience in the public and not-for-profit sectors. Principal services include assurance and advisory; taxation; consultancy; corporate recovery and insolvency; corporate finance and forensic. The firm has particular expertise in advising sectors such as hotels and leisure; mining and resource; public sector; real estate and construction; professional practices; not-for-profit; and medical. The firm’s web site is www.pkf.co.uk
5. PKF (UK) LLP is a member firm of the PKF International Limited network of legally independent firms. The PKF International Limited network has around 17,600 people operating in 120 countries around the world.
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