Deloitte are reporting improved hotel occupancies in the regions during the first half of 2010, increasing 4.2% to 65.8%. Average room rates, though, are yet to see growth, falling 2.3% during the first six months of the year to £66, just £2 short of the same peeriod last year. As a result, revPAR for the first half of 2010 grew 1.7% to £43.
Is this typical of what all regional hotels are experiencing?
In my experience things are really looking up. With the combination of the strong euro and events such as the ash cloud more people are looking to stay on these shores.
I think decent country house spa hotels in particular are doing well as couples are increasingly going away for indulgent long weekends in the uk.
At Pride of Britain we have member hotels in most regions of the UK and, through central reservations, process SOME of their business. In the year to date the value of these reservations has risen by 12% compared with the same period last year which was also an improvement on the year before. Almost all of this growth is attributable to domestic leisure breaks. Perhaps even more heartening, the average booking value has risen from £411 to £430.
At my hotel - the Langham in Eastbourne - in the first six months of 2010 the average room rate was £49, up by 6% on last year. The revpar is up by £5-50, and business has grown year on year. Guests tell me that the pricing is right and we have done well during the recession, but in my view things will get worse next year because of the VAT rise to 20%. This is going to have a knock-on effect with so many things. Even items that aren't VAT rated will go up in price because of related costs, e.g. fuel and delivery, that do have VAT on them. Personally I think this is going to be a disaster and could put struggling hotels out of business.
Neil, good news at the moment - what will your response be to the VAT rise next year, at the Langham?
Mark: Neil, good news at the moment - what will your response be to the VAT rise next year, at the Langham?
We have already had to inform customers that our prices will increase next year due to the rise in VAT. The main knock on effect for my hotel is that it will slow down the refurbishment programme, because of the added cost of labour and materials, and it will have a major impact on recruitment. In 2011 I will be employing more younger staff, because they are paid a lower hourly rate than anyone over the age of 22. So local employment is certainly going to suffer as a result of the VAT rise.
Yes, of course, it's as much about what you spend as what you charge, isn't it? That's the trouble with a downturn: there's a domino effect. You plan in less refurbishment, the builders make less cash and spend less on materials ... One thing that would break the cycle would be if the banks lent more readily. I see Lloyds TSB announced bumper profits this morning. Apparently, they are on course to meet required lending levels for the year - but perhaps those levels could have been more stretching?