UK room rates fall for first time since August 2003

Average room rates in UK hotels fell in September – the first comparable monthly drop since August 2003, when customer numbers were hit by the Iraq war and the Sars health crisis, research revealed today.

The study, by consultancy Deloitte, showed that, in September, average room rates across the UK were down 0.5% on the year before.

While this marked the first month of average room rate decline since April 2006, the like-for-like results for that month which were skewed due to Easter falling in March 2005. It was, in comparable terms, the first drop since August 2003.

Nevertheless, the UK hotel sector managed to post a 2.4% increase in revenue per available room (revpar) in the year-to-September, up to £62. This was driven by a 3.9% increase in average room rates, as occupancy fell 1.4%.  

Hotels in London were, as usual, the major driver of growth results with revpar up 6.4%, on the back of a 6.7% increase in average room rates. In contrast, the regions only managed to achieve a 0.1% increase in revpar.

Looking ahead, Marvin Rust, hospitality managing partner at Deloitte, warned that the global economic slowdown would make for a challenging final quarter for UK hoteliers, especially if London hotels begin to struggle.  

He urged hotel operators to take steps to cope with the drop in consumer spending, but warned against cutting rates.

“Rate discounting can create price wars between hotels and growing average room rates back to previously achieved levels is difficult,” Rust said. 

“Creating innovative ways of attracting guests is now more important than ever and incentives that will boost occupancy such as a package to include say dinner or spa treatments may work out to be a better strategic option.”

TRI HotStats: annual UK hotel figures - Industry data >> 

UK hotel revenue falls in first quarter of 2008 >> 

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Read more news, analyses and comment on the UK hotel sector here >>

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By Daniel Thomas

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