Upmarket hotels in London with average room of rates of more than £160 are showed double digit growth in the year to April 2006, according to a new HotelBenchmark survey by Deloitte.
The consultants found that these properties, some four-star but mainly five-star, enjoyed a 7% growth in average room rates, a 12% increase in occupancy and a "whopping" 20% growth in revenue per available room (revPAR).
But the survey found that room rates at the other end of the London market, the budget sector where rates are under £80 a night, is "struggling to see any growth."
These hotels had a revPAR increase of just 1% in the 12 months to April 2006 and a similar rise in occupancy to 77% but a 1% drop in average room rates.
Across the board, London had an 8% rise in revPAR, a 5% rise in occupancy to 77% and a 3% increase in average room rates to £107.
Airports hotels which enjoyed a boom in 2004-2005, fared less well in the past 12 months with Gatwick seeing only a 2% increase in revPAR and Heathrow a 3% rise.
Marvin Rust, hospitality managing partner at Deloitte said: “This polarisation in the London market is consistent with what is happening in the UK regions, but on a much more dramatic scale.
"Top end hotels are more vulnerable to greater fluctuation in both occupancy and room rates, however, the more modestly priced hotels are struggling to lift room rates in a market where price is arguably the predominant factor for customers.
“Business travel remained strong which is reflected in the performance at the top end of the hotel market."
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SkyTeam to locate to Heathrow T4
Nine members of the SkyTeam alliance have signed an agreement with BAA to re-locate to Heathrow Airport's Terminal 4 from 2008.
Aeroflot, Air France, Alitalia, Czech Airlines and Korean Air will join KLM which already operates from the terminal.
Aeroméxico, Delta Air Lines, and Northwest Airlines will join them if they should ever operate from the airport.
The move is part of a major re-organisation at Heathrow embracing the opening of the new Terminal 5 in 2008 which will be used by BA and some of its oneworld partners.
The rival Star Alliance has already signed a deal to use a re-vamped Terminal 1.
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