UK hotels growth trails global rivals

UK hotel market growth lagged behind that of international rivals in the first half of 2008, research revealed this week.

While the global hotel market defied the increasingly uncertain economic climate with double-digit growth in revenue per available room (revpar), revpar in the UK grew by just 3.5%.

Marvin Rust, hospitality managing partner at consultant Deloitte, which produced the report with STR Global, warned hoteliers to expect a downturn.

"The decline in consumer confidence is likely to have a knock-on effect for the hotel industry," he said.

He added: "The last recession was characterised by an initial decline in occupancy rates, followed by a fall in room rates. Hoteliers need to consider how they will respond if consumer spending tightens further. The inclination in tough times is to respond by cutting prices. However, once average room rates fall, it becomes difficult to move them back up."

Rust said that, in the long term, incentives that boosted occupancy - such as a minimum-night stay over busy periods or two-for-one offers - would likely be a better strategy to employ.

Aberdeen, the centre for North Sea oil production and described by Deloitte as the UK's star performer in previous years, saw occupancy slip in the first half of the year as oil companies decreased their travel spend, but still saw revpar grow by 4.6% to £61. Liverpool is also benefiting from its status as European Capital of Culture, with increased occupancy pushing revpar up 10.9% to £53.

Despite recording a 15% increase in revpar in the first six months of 2008, continental Europe is also expected to see a downturn of visitors, with the strength of the euro against sterling and the US dollar predicted to put off US and UK tourists.

Revpar growth worldwide

• Central and South America up 23% to £43
• Middle East up 21.6% to £71
• Europe up 15.2% to £61
• Asia-Pacific up 13.3% to £53
• UK up 3.5% to £59
• North America up 2.2% to £35

Source: STR Global/Deloitte Hotelbenchmark sample of 7,800 hotels

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By Mike Steere

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