Hotels suffer revenue drop

A testing year ahead is predicted after a fragile 2002 and a disappointing December for the UK hotel industry, according to two reports published this week.

The HotStats survey, by consultancy TRI Hospitality, shows occupancy across the UK's chain-operated hotels was static, dropping by just 0.1 percentage points to 72.2% in the 12 months to 31 December 2002.

But revenues dropped further, with average room rate down by 3.2% to £68.38 compared with £70.65 for 2001, while revenue per available room (revpar) fell by 3.1% to £49.36, against £50.94 a year earlier.

London hotels were the worst hit, with revpar down by almost 6% to £64.33, compared with £68.35 in 2001. Occupancy increased by 2.2 percentage points to 77.7%, while average room rate was down by 8.5% to £82.77, from £90.51 a year earlier.

Hotels in the provinces fared slightly better, recording a 1.5% drop in revpar to £43.88, compared with £44.53 in 2001. Room rate was down by 0.5% to £62.50 and occupancy dipped by 0.7 percentage points to 70.2%.

Meanwhile, PKF has reported a disappointing year-end for many hotels. While London hotels saw occupancy grow in December with an 8.4% rise to 66.8%, average room rate slipped by 1.8% to £93.04, leaving rooms yield up 6.5% to £62.15, compared with the same month in 2001.

Regional hotels struggled to grow room yield with a 0.6% increase to £34.27 and a 0.4% dip in occupancy to 58.8%. Average room rate in the provinces gained a 1% rise to £58.31.

"Once occupancy has increased we will see average room rates pick up again," said Melvin Gold, managing director of hotel consultancy services at PKF.

However, he said that while occupancy in London for December shows an increase on the previous year, it was still below 75% and "a disappointing level by historic standards".