Hanover predicts slow first half as price cutting affects profits

Increased price cutting and the slow recovery in tourist numbers will continue to hamper trading at UK hotel group Hanover International in the first half of this year.

Chairman Peter Eyles said that, although the group had seen some recovery in short-term bookings, this was not enough to compensate for the decline in longer-term reservations experienced after 11 September.

This, and the increase in price cutting that has occurred in the industry, would "undoubtedly affect" the first half of 2002.

In the 12 months to 31 December 2001 turnover at Hanover increased by almost 25% to £38.4m, up from £30.8m in 2000. Pre-tax profit dipped slightly to £5.02m, from £5.04m a year earlier.

During the period, the group recorded an average room rate of £60.53, up by 3% on the £58.78 recorded in 2000.

Occupancy fell by 2.4 percentage points to 60.5%, with revenue per available room (revpar) dropping marginally to £36.59, compared with £36.65 a year earlier.

Eyles is one of the first hotel operators to say the events of 11 September were not the main cause of the downturn in business.

He said: "With the benefit of hindsight, the slowdown in many sectors of the UK had started to occur much earlier than September."