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But at lower room rates - TRI
UK hotel occupancy steadied in June at 1% lower than the previous year, the latest HotStats report from TRI Hospitality Consulting revealed.
Occupancy levels in London reached 84.1% last month driven by strong corporate demand, tourism and major international events such as the Wimbledon tennis tournament, TRI said.
But TRI said levels in the capital had been maintained at the expense of room rates which dropped 8.8% in June year-on-year.
TRI deputy managing director David Bailey said room rates in June 2008 were high and a tough comparison against this year's figures.
Occupancy in London fell 2.7% to 77.3% in the six months to June 2009 while room rates fell 7.3% to £108.39.
TRI said the London market had "moderated the pace in occupancy decline" but widened the performance gap in achieved room rate.
Mr Bailey added: "During previous recessions, once we have seen occupancy flatten out, it takes a few more months before rate steadies.
"It is too early to say we are at the beginning of the end of the recession for hotels but I believe we can be certain that it is the end of the beginning."
Hotels in other UK regions also dropped room rates by 7.8% compared to London's 8.8% decline.
TRI said that on the whole the UK's regional hotels had stopped the decline in average room rates and slowed the downward trend in room rates over the six months to June.
"The UK hotel market not only narrowed the decline in occupancy and average room rate levels but also succeeded in keeping costs under control, resulting in a less steep decline in daily profit," TRI said.
Total room nights sold by the UK's budget hotel market fell 1.5% in June year-on-year, outstripping the full-service sector which saw demand fall 4%.
"Due to limited discounting, room revenue in the budget sector remained stable, as opposed to a drop of over 9% in the full-service sector, which further widened the performance gap between the two sectors," TRI said.