Hotel trading: January

Our monthly look at hotel trading, based on figures from PKF, shows that uncertainty over a war in Iraq continued to keep hotel market performance in the doldrums in January, and February won't be much better, according to the latest report by PKF.

Despite some occupancy growth in the capital - a rise of 5.5% to 64.2% - this failed to meet 2001 levels for the same month. Average room rate dropped by almost 5%, but the occupancy increase allowed rooms yield to edge up by a marginal 0.4% to £57.81.

Regional hotels saw the first drop in both occupancy and average room rate since July last year. Occupancy fell 1.8% to 56.5% while average room rate dipped 1.7% to £59.73 leaving rooms yield down 3.4% to £33.75. The gloomy state of the hotel industry, says the report, is a combination of poor domestic conditions, evident in the slow-down of consumer spend in the retail sector, compounded by global political uncertainty and fewer overseas visitors.

"It is hardly surprising that hotels across the UK are seeing trade and room rates fall away," said Melvin Gold, managing director of hotel consultancy services at PKF. "The uncertainty regarding a war with Iraq is damaging for the hotel market, because it relies so heavily on overseas markets and international trade, making it impossible to predict when we will see things pick up. It is likely that the downward trend will continue for February," he said.

January figures