UK hotel bosses downgrade hopes for 2010 upturn

UK hotel executives have reversed their prediction that the hotel market would see a sustained upturn in 2010, with just 2% now expecting its fortunes to improve this year.

A year ago, 37% hoped that 2010 would bring solid growth but most hoteliers have been forced into a rethink. More than half (52%) now fear that room rates will not return to pre-financial crisis levels until after 2012.

The figures come as part of law firm DLA Piper’s 2010 European Hospitality Outlook report, launched at the International Hotel Investment Forum in Berlin earlier this week.

Karen Friebe, global co-chair of DLA Piper’s Hospitality and Leisure practice, said: “While there are signs that occupancy levels have stabilised, there is growing concern throughout the industry that room rates will remain low for years to come and conversions are unlikely to compensate for reduced new build activity.”

However, 45% of the 155 UK hotel executives questioned predicted a rise in new-build developments while only 22% expected a fall. Hoteliers in Europe were much more downbeat, with 38% expecting a fall compared with 31% anticipating a rise.

And 32% of respondents - mostly those at well-capitalised hotel chains - said their own outlook for the next 12 months was “bullish”, citing investment opportunities created by the financial crisis, with the economy sector named as the most attractive prospect.

Meanwhile, the next three years are likely to see significant numbers of hotel chains looking to expand into China and India. Around 30% saw China as one of the best markets in which to grow their business, while 24% pointed to India.

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By Neil Gerrard

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