UK hotel industry experiencing best year since 2000

The UK hotel industry is experiencing its best performing year since 2000 and looks set for steady growth over the next three years, according to research from PricewaterhouseCoopers (PWC).

PWC's Hospitality Directions Europe -UK Hotel forecast report, released today, predicts revenue per available room (revpar) growth of 5.5% for 2006, 4.5% for 2007 and 4.9% for 2008.

This growth would take revpar to £56.18 this year, £58.69 in 2007 (outgunning the record-year 2000) and with the potential of five years of uninterrupted growth, revpar should reach £61.53 by 2008.

Better than expected economic growth, a sustained recovery in corporate travel demand and leisure travel volumes and few over-supply concerns have all contributed to the forecasts.

Liz Hall, head of research at PWC and report author, said: "The hotel sector has had to work hard over the past few years to sustain its recovery. The current boom is very much a case of London having the year it should have had in 2005.

"London is the engine driving the UK at the moment with occupancies at their highest for almost 10 years and robust room rates growth pushing revpar to 12.9% in 2006 or 9.9% stripping out inflation."

However, Hall warned that risks for travel demand remain significant in an industry that is both cyclical and vulnerable to external events.

"Last year we saw a very resilient hotel and travel sector bounce back quickly after the July incidents and we anticipate few long-lasting impacts from the recent events at UK airports," she said.

"But a harder than expected economic landing, rising oil and energy costs, terrorism, bird flu fears, and a discretionary income squeeze as well as the spectre of a bed tax could all impact travel demand and shift performance off-course."

London hotels boost revpar by 24% >>

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By Daniel Thomas

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