Hotel investors look out for acquisitions as upturn approaches

The UK hotels sector is set for "increased acquisition activity" during the course of 2004 as investors look to get in before the anticipated recovery starts to take effect, according to consultancy PricewaterhouseCoopers (PWC).

"There are private equity investors out there looking to take advantage of acquisition opportunities in time for the upturn," said Robert Milburn, leader of PWC's hospitality and leisure group.

"The fundamentals are definitely right for it," he added

PWC believes the UK industry has reached a turning point, following a slight improvement in the second half of 2003, although the pace of recovery is slower than expected, with a 3.5% decline in UK revenue per available room (revpar) in 2003.

Milburn went on to say that 2004 would be "another uphill struggle" for hoteliers, although the outlook for 2005 was more positive.

In its latest Hospitality Directions Europe forecast, PWC has reduced its predictions for UK revpar growth next year from 4.0% (as predicted in August) to 2.7%.

In London it expects "a long haul back" for hoteliers, with revpar growth of just 0.9% in 2004 and 4.8% in 2005.

For the provinces, it forecasts 2.9% revpar growth in 2004 and 4.9% in 2005.