 Investment fuels UK hotel growth and innovation PKF report reveals
30 March 2007: Britain’s hotel industry is set to expand by nearly 8% over the next two years with over 23,000 rooms due to be added, lifting total capacity to 320,000, according to Hotel Britain 2007, PKF’s definitive guide to the performance and prospects of the UK hotel industry.
According to Robert Barnard, Hotel Consultancy Services Partner at PKF Accountants & business advisers, the growth will come primarily from the luxury and budget (limited service) ends of the market.
There was explosive growth in 2006 in the number of branded budget hotel rooms, which made up 80% of the additional 3,600 rooms added last year.
The luxury segment is also set to expand with a new supply of both four and five-star hotels – in London, Edinburgh and Glasgow – scheduled mainly for 2008/09.
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 | Robert said: “Hotel customers are already benefiting from a broader range of the types and prices of rooms available and that trend is set to continue. The extent of growth is making this an incredibly exciting time for the industry and the future is very bright. |
“There is increasing competition in the UK hotel market with hoteliers recognising the need to provide their customers with different levels of service and pricing. As competition intensifies, product differentiation is increasing in the limited service segment, with new brands ranging from ‘luxury budget’, to functional and very affordable products. For the first time in many years, we’re seeing true innovation in the industry with the introduction of new hotel concepts.”
2006 Hotel Performance
Last year, UK hotels enjoyed their best year since the turn of the Millennium with an impressive 10.1% annual rise in yield as greater numbers of visitors filled up rooms across the country. Only Sheffield, Nottingham and Leeds posted slightly lower yields compared to 2005. Average occupancy rates rose 3.0% to 75.7% while average room rates rose 6.9% to £87.07.
London hotels were the clear front-runners delivering an overall 16.6% yield improvement with luxury hotels experiencing 21.3% yield growth, as the capital recovered strongly from the effects of terrorist attacks in 2005. Since 2002, London rooms yield has grown by a compound rate of 6.3%, taking average room revenue to £97.12 a night, confirming that hotels in the capital have returned to a healthier state than before the 9/11 terrorist attacks.
In the regions, upscale hotels experienced the highest growth in rooms yield. Properties achieving a rate of over £80 per night reported an annual 6.5% improvement in yield to £72.38, fuelled by an higher average room rate of £96.97. Better quality of rooms and facilities, coupled with greater control of distribution via independent bookings websites, probably helped. Regional budget hotels suffered in comparison with a much slower annual yield growth of 1.1%.
The average figures, however, mask major regional variations with Scottish hotels forging ahead. This was due largely to the strength of Edinburgh, Glasgow and Aberdeen which performed well last year.
Hotel Britain 2007 costs £300 and is available by contacting Danielle.simmonds@uk.pkf.com or via PKF’s website at www.pkf.co.uk
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For further information or to arrange an interview with Robert Barnard:
Jason Gowar, PR Manager – 020 7065 0573
Jane Murray, PR Executive – 020 7065 0135
Notes to Editors
1. Hotel Britain is compiled from the responses of a representative cross section of 656 hotels representing 98,674 rooms. 150 of these hotels are located in the capital and 506 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 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.
3. Definition of the key terms used in the surveys table 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 one of the UK’s leading firms of accountants and business advisers and specialises in advising the management of developing private and public businesses. The firm has more than 1,500 partners and staff operating in 23 offices around the country. Principal services include assurance and advisory; consultancy; corporate finance; corporate recovery and insolvency; forensic; and taxation. The firm has particular expertise in advising sectors such as small and medium-sized companies; charities; hotels and leisure; medical; professional partnerships; public sector; property and construction; and technology. The firm’s web site is www.pkf.co.uk.
5. PKF (UK) LLP is a member of PKF International, which has more 12,800 people operating in over 100 countries around the world.
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