London hoteliers enjoyed a return to a more profitable climate last year, according to statistics released by a global accountancy firm.
Deloitte said the capital city was hailing year-on-year double-digit growth in revenue per available room (revPAR).
The growth and average room rates were not as strong as pre-recession levels, but the figures suggest a robust economy recovery is taking place.
Deloitte said revPAR, for the year until December 31, was up 11.9%, to £112, while average room rates, seen as the main driver of growth, were up £12 to £136.
Hotels in the UK regions were hit harder than those in the capital throughout the downturn, but 2010 ended on a high note, with revPAR bouncing back up 3.9% to £46.
Marvin Rust, Deloitte’s hospitality managing partner, warned, however, that 2011 could be a more challenging year for the hotel business.
He said the increase in VAT and a slowdown in the UK’s GDP – expected to be 1.3% growth – would both provide headaches for hotel bosses.
“With future demand for hotel rooms in both London and the regions beginning to weaken, caution may well be the buzz word for next year,” he said.
“It is interesting to note however that the econometric models predict a strong start to 2011 before a slowdown in the second half of the year.”
Miles Quest, a spokesman for the British Hospitality Association, agreed that 2010 was “something of a success” for London hotels, and that this year would present more challenges.
However, he insisted there was still much optimism within the sector.
“Whether 2011 will match up [to the successes of last year] is doubtful, but the hoteliers are confident.
“The rise in VAT is a concern, and there are other costs creeping up, too. But I think the weakness of sterling against the euro and the dollar will mean more inbound tourism, and might discourage some Brits from travelling abroad. More people have been choosing to holiday in the UK for this reason.
“By the end of 2011, I'm sure we’ll see that London hotels have had a good year, and the regions will have caught up. The Royal wedding will also help attract visitors to London.”
Margaret Birse, global travel manager for Serco, said her company had noticed slight rate increases in average London room rates during recent negotiations with suppliers.
“[The increase] would be somewhere in the region of 5 to 10%, which reflects a turnaround in the economy.
“However, availability remains an issue, especially during peak times, such as London fashion week. Last year was terrible.”
Birse said her overall spend in 2010 fell by about 5%, though she believed that was down to corporate negotiations, rather than lower best available rates.
Nick van Marken, Deloitte’s global head of advisory for tourism, hospitality and leisure, said London benefited from a spike in investment activity in 2010.
“This really underpins the city’s inherent attraction to global investors, and demonstrates that even in difficult times, prime hotel property remains in demand.”
He said similar trends were clearly evident in New York and Paris.
Deloitte estimated that total transaction activity at London hotels would be in excess of £1bn by the end of 2011.