Hotel occupancy hits 10-year high

By Andrew Sangster

Occupancy levels in the UK's hotels reached a 10-year high during 1995, according to the latest survey by BDO Hospitality Consulting.

Its report, United Kingdom Hotel Industry 1996, found that across a sample of more than 300 hotels, bedroom occupancy rose by almost five percentage points year-on-year to reach 69.6%.

This promising performance in occupancy was not replicated in achieved room rates, however, which continued to lag behind inflation. But Granada's decision to raise rates at its Forte hotels could mean progress may soon be made in this area.

Jonathan Langston, joint managing director at BDO, said the increase in tariffs at Forte was overdue and will pave the way for other hoteliers to reconsider their published rates and introduce price increases.

But he warned: "The industry must guard against the greed of the late 1980s and continue to deliver value for money to guests through ongoing investment in their product and staff training."

The failure of room rates to climb significantly in 1995 counteracted any effects of better occupancy. Average room rates at the hotels in the sample rose by just 5.8% in 1995 to reach £50.17, some 20% below 1986 levels if inflation is allowed for. In London, rates rose by 8.6% to reach £88.67, but even this was almost 10% down on 1986 rates.

Room yield across the UK in 1995 was almost 8% behind 1986, allowing for inflation. At its 1989 peak, room yield was about 19% ahead of 1995, if the effects of inflation are removed.

But at least in absolute terms, average room yield in 1995 was ahead of 1989 - the first time this has happened since the recession.

Happily, gross operating profit (GOP) was back up to levels enjoyed in the mid-1980s. In 1995, GOP was 9% higher than in 1994, which BDO said was due to better cost-control. Payroll costs per available room, for example, dropped 6% year-on-year.

The report also found that hoteliers have stepped up their marketing expenditure, particularly in London. Spend per available room was up 5.2% to £671 in the UK, and up 11.3% to £1,117 in London.

This builds on the increase of almost 35% across the UK between 1993 and 1994 as hoteliers reversed the cutbacks imposed during the recession.

lUnited Kingdom Hotel Industry 1996 costs £125 from BDO Hospitality Consulting. For a copy, contact Andrew Shaw, tel: 0171 486 5191.