 London hotels had a strong 2011
8 February 2012: London hotels enjoyed a stellar 2011 while their counterparts in the regions just about held their own over the course of the year, according to hotel figures released today by PKF Hotel Consultancy Services.
Looking specifically at December, hotels in the capital saw room rate rise by 0.2% from £134.93 in December 2010 to £135.23 in December 2011, whilst occupancy increased by 1.0% from 75.0% to 75.8%. This resulted in rooms yield growth of 1.2% to £102.56 in December 2011, up from £101.30 for the same month in 2010. Regional hotels posted a 3.0% rise in occupancy to 59.9% in December 2011 and a 5.6% drop in room rate from £61.70 to £58.26. Rooms yield consequently fell 2.7% to £34.88, compared with £35.85 twelve months ago.
For the year as a whole, rooms yield in London reached £115.94, 6.3% higher than the in 2010. This was driven by a 6.7% rise in room rate from £131.36 to £140.09, which more than offset a 0.3% dip in occupancy from 83.0% to 82.8%. In the regions, rooms yield grew by 0.8% to £44.12 on the back of a 1.5% increase in occupancy from 69.7% to 70.8% and a 0.7% fall in room rate to £62.31 from £62.76.
Robert Barnard, partner for Hotel Consultancy Services at PKF, commented: “The performance of London hotels has been exceptionally strong throughout most of the year – a 6.3% increase in rooms yield in such a challenging environment is nothing short of a miracle although it is someway off the 12.1% growth posted in 2010. The headline numbers may have been stronger still had rooms rate growth at the very top end not been dampened by the opening of several flagship hotels [the Savoy, Corinthia and Four Seasons] that increased capacity in this price bracket last year."
“Occupancy in the capital has dipped slightly but remains at a very high level. Our analysis shows that, if the traditionally quiet months of January and February are excluded, London hotels are at almost 100% occupancy for five nights in every seven. London remains a major draw for both the corporate and the leisure market despite the economic malaise, and hotels are a major beneficiary of its enduring appeal."
“Elsewhere, performance has been solid, everything considered. Room rates have been squeezed due to continued weakness in the corporate and MICE [meetings, incentives, conferences & exhibitions] markets, which are a vital source of income for regional hotels. The lack of any meaningful new development prevented a more dramatic decline, and also helped occupancy to increase slightly.”
“Looking ahead, we are optimistic that the Olympics will have a positive effect on the performance of London hotels this year, although I suspect the impact won’t be as dramatic as some of the more bullish commentators predict. With occupancy at already very high levels, and with few hoteliers expected to break ranks and hike prices beyond agreed levels, there is scope for a modest increase in rooms yields during July and August. The buzz created by the Games should also help the sector during the rest of the year, much as it did in Beijing in 2008 and in Cape Town around the time of the football World Cup in 2010."
“Regional hotels, by contrast, will have modest expectations for 2012. Given the economic turbulence, and no sign of any improvement in their core corporate markets, many will be relieved just to hold their own this year."
“We don’t expect the Diamond Jubilee celebrations to have a significant impact on hotel performance, even in London. The Jubilee, much like last year’s Royal Wedding, will appeal mostly to domestic visitors who are unlikely to stay beyond a day and therefore will not require any overnight accommodation."
“Longer term, we’re not expecting a post-Olympic slump in the London hotel market. The capital will adapt in order to maintain its appeal in much the same way it always has done. The regeneration of East London – which is as much about new retail and offices as it is about the Olympic site – is just one of a number of new ways in which the city will attract business and leisure visitors over the next few years.”
Ends
For further information, please contact: Andy Konieczko, 020 7065 0537, andrew.konieczko@uk.pkf.com
Preliminary data for December 2011
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| Average daily room rate per occupied room | £58.26 | £61.70 | -5.6% |
| Average daily room occupancy | 59.9% | 58.1% | 3.0% |
| Average daily rooms yield per available room | £34.88 | £35.85 | -2.7% |
| Approximate number of rooms per day | 97,200 | 97,000 |  |
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| Average daily room rate per occupied room | £135.23 | £134.93 | 0.2% |
| Average daily room occupancy | 75.8% | 75.0% | 1.0% |
| Average daily rooms yield per available room | £102.56 | £101.30 | 1.2% |
| Approximate number of rooms per day | 40,400 | 40,450 | |
Preliminary data for Full Year 2011
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| Average daily room rate per occupied room | £62.31 | £62.76 | -0.7% |
| Average daily room occupancy | 70.8% | 69.7% | 1.5% |
| Average daily rooms yield per available room | £44.12 | £43.79 | 0.8% |
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| Average daily room rate per occupied room | £140.09 | £131.36 | 6.7% |
| Average daily room occupancy | 82.8% | 83.0% | -0.3% |
| Average daily rooms yield per available room | £115.94 | £109.04 | 6.3% |
Notes to Editors:
1. 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
2. PKF (UK) LLP is a member firm of the PKF International Limited (PKFI) network of legally independent member firms. The PKFI member firms have around 2,200 partners and more than 21,000 staff in around 125 countries.
3. 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 a field. 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 web site features regular articles from the firm’s hotel consultancy services experts on industry topics – the address is www.pkf.co.uk/hotelcons
4. PKF (UK) LLP’s hotel trends surveys feature a broad range of hotels across the country although mainly in the 3 – 4 star categories and featuring rather more chain operated hotels than those operated independently. While there are a fair number of hotels in country and rural areas, there is a predominance of hotels in towns and cities. In London, supply featured is mainly in the 3 –5 star categories.
5. Definition of the key terms used in the surveys table are given below:
6. Room occupancy: the ratio of total occupied rooms to total available rooms
7. Average achieved room rate (AARR): rooms revenue divided by the total number of guest rooms occupied during the year.
8. Rooms yield: room occupancy multiplied by the average achieved room rate (also known as RevPar).
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