Tough second half of the year ahead for hoteliers

The hotel industry should brace itself for a much tougher second half of the year, according to a new report from consultancy PricewaterhouseCoopers (PWC).

The report, entitled UK Hotels: Early Check Out For Good Times, states that although UK hotels have enjoyed positive trading in the first half of the year the next six months will bring about a significant deterioration as the credit crunch bites.

Robert Milburn, partner and UK leader of hospitality and leisure at PWC, said in the report that "prospects are shifting downwards".

"London is still on track to grow revenues by over 5% this year but there is a spectre of harsher times ahead as the slowdown arrives earlier than previously expected," said Milburn.

UK revenue per available room (revpar) is 3.1% up year-on-year to May, with London's hotels trading particularly strongly.

However, PWC expects the UK's full year revpar growth to fall back to 2.8% as the economic climate worsens. The forcast for revpar in 2009 is just 1.4%.

The capital is expected to outperform the UK this year with "robust" revpar growth of 5.2%, but revpar growth in London is expcected to be 1.5% next year.

Milburn added: "Hoteliers are facing fragile and volatile conditions. Lead-in times are getting ever shorter, 1-2 weeks rather than 4-6 weeks is now the norm, and this could result in discounting if hoteliers start to panic".

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By Gemma Sharkey

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