London hotels on road to recovery

Although London hotels suffered a dreadful 2001, the market will recover this year, consultant PKF said in a report published last week.

According to PKF's London Trends 2002 survey, 2001 was always going to be a tough year for the hotel industry.

Melvin Gold, managing director of hotel consultancy services at PKF, said: "While it cannot be denied that the London hotel industry suffered a bad year, it was 2001's misfortune to follow the millennium, a year of record-breaking success.

"There was never any expectation that London would be able to match the second highest-ever rooms yield of £91.59 achieved in 2000."

During 2001, occupancy at London's hotels dipped below 80% for the first time in eight years. It fell by 9.7% to 72.9%.

Average room rate was down by 4.1% to £108.85, with revenue per available room (revpar) falling by 13.4% to £79.35. This included, in October, the largest single-month drop, when revpar fell by 34.1% to £68.84.

The survey also highlights the difference in performance between inner and outer London hotels. Inner London hotels, which are more dependent on overseas tourists, saw revpar fall by 13.8% to £81.41, while outer London hotels recorded a smaller decline of just 2.4%.

PKF is confident that business will recover in 2002. Gold said: "While 2001 may have seemed like an annus horribilis, it should be regarded as a dip caused by a variety of different and unforeseen circumstances from which the industry will recover."

He added that there were a number of events such as the Queen's Golden Jubilee and the Farnborough Air Show to look forward to in 2002 that were likely to boost business.

by Samantha McClary