UK hotels are likely to experience some slowdown in growth but will not suffer a ”meltdown” in the next couple of years, despite a shaky world economy.
According to a PricewaterhouseCoopers report titled ”Hospitality Directions: UK Hotel Forecast,” hotels are relatively well placed to cope with the current global financial uncertainty.
National room rate growth will continue, just not at the same pace as the last four years ” it will decelerate from 6.8% in 2007 to 3.8% this year and a further 3.8% in 2009. In London, it is expected to continue but to moderate to 5.5% this year and 5.0% in 2009 compared to 11.2% in 2007. Outside the capital, growth could reach 2.8% this year and 3.1% next year.
”This is a time for hotels to hold their nerve,” said PricewaterhouseCoopers partner and UK leader of Hospitality and Leisure, Robert Milburn. ”While the industry will feel the pinch from the latest economic situation, it is coming from a good position with some excellent products in the market.
”UK hotels overall should see reasonable growth, but the economy is very fragile at present and another tilt could have a more significant impact on the sector.”
Occupancy levels are expected to remain high at around 81% but remain broadly flat for the next few years, and average room rates are anticipated to suffer a slowdown in growth (they have soared in recent years, especially in London) to ”127 in 2008 and ”134 in 2009.
UK revenue per available room (RevPAR) is forecast to grow by 4.1% in 2008 and 3.6% in 2009 ” and in London may pass ”100 for the first time in 2008 if it increases by the predicted 6% to ”103.43.
”A tightening of corporate travel budgets and policies and more careful consumer spending will make it harder to attract both the consumer and corporate pound,” said PricewaterhouseCoopers head of hospitality research Liz Hall. ”All eyes are on the economy but the next 18 months will not just be about that. There are many intangibles that drive consumer choice.
”Many operators have invested heavily in quality products. This should pay off now by helping deliver a unique experience which consumers may recommend to their social networks ” online and in person.”
Milburn added: ”In terms of investment and development, the credit crunch may even be a good thing for the industry. Large developments that have not yet been committed could be postponed and result in less new supply coming on to the market in 2009. This will help keep rates up.”