London hotels are hit by worst-ever occupancy figures

Hotels in London recorded their worst performance in April for more than 20 years, according to consultancy PKF.

The war in Iraq, the outbreak of Sars and the traditionally quiet Easter weekend all combined to hit hotels in the capital heavily last month, with occupancy falling by 10.3 percentage points to 59.8%.

This was the lowest April figure ever recorded by PKF, which has been tracking hotel occupancies for 26 years. Average room rate also fell last month, by 10.6% to £87.42. Rooms yield dropped 23.7% to £52.30.

Melvin Gold, managing director of hotel consultancy services at PKF, said it was too early to know whether these figures represented the worst point for the market: "With continued uncertainty in economic and political situations around the world, we can say that it is certainly a low point; whether it is the low point is unanswered."

Jonathan Raggett, managing director of Red Carnation hotels, agreed April had been dreadful, but said May had been better. Last week, largely as a result of the Chelsea Flower Show, the group's five London hotels - 41, the Milestone, the Chesterfield, the Rubens and the Montague - were full.

Also feeling positive was Patrik Wennerland, sales and marketing director of Myhotels. The company has two hotels in London - one in Chelsea, the other in Bloomsbury. Wennerland said April had been a "bumpy" month but added: "Although we are being cautious with regard to the speed at which business is going to come back, we are optimistic."

PKF reported that occupancy levels held up reasonably well in the provinces in April, with hotels reporting similar levels to last year. Rupert Kenyon, marketing director of the four-strong Alias hotels, agreed: "It was a good month and no different to previous years."

However, occupancy in the provinces dipped by 0.5 percentage points to 68.2%, while average room rates fell 7.7% to £58.16. Rooms yield was down 8.4% at £39.67

* In another recent report, consultants PricewaterhouseCoopers (PWC) predict an increase in demand for UK hotel bedrooms in the second half of the year. However, it expects the improvement in revenues to be lower than previously forecast. Its latest research shows that the strengthening UK economy, the end of the Iraq war, the containment of the Sars virus and marketing efforts to increase demand have begun to take effect.

"Those waiting for a ‘bounce' effect in hotel sector demand and earnings, will have to hold their breath for a little longer, as we forecast a longer wait and perhaps a smaller bounce," commented Liz Hall, research manager for PWC's hospitality and leisure division.

PWC has cut its forecast for growth in revenue per available room to 0.7% for 2003, from 1.4% in its previous forecast earlier this year.

By Louise Bozec
Preliminary data for April 2003