By Angela Frewin
Independent midmarket hotels are being squeezed at both ends by corporate luxury hotels and by budget-style chains, warns accountancy firm Coopers & Lybrand.
A survey by the firm's business recovery and insolvency department adds that the pressure on independents will grow - especially from the budget side, which is forecast to double in size between now and 2002.
This would put independents in a weaker position to withstand the next recession, says the report.
While 1997 saw occupancy levels of more than 70%, Coopers & Lybrand pointed to discrepancies between commercial surveys, based mainly on larger, group-owned properties, and regional tourist board reports, which focus on small, privately-owned hotels graded three-star or below.
"The results produced by the tourist boards are consistently lower by an average margin of at least 10 percentage points," it says.
Hospitality, hotels and leisure specialist Stephen Broome added that the midmarket hotel's traditional stronghold in city and town centres was now under attack, especially from budget chains beginning to run out of prime motorway and roadside sites.
Increased competition will almost inevitably lead to discounting of room rates as budget hotels compete with one another, squeezing midmarket properties even harder, says the report. Falling occupancies, allied to high fixed running costs, will undermine the profitability and value of the small, private hotel.
Predicting that the strong pound, higher interest rates, continuing skill shortages and the minimum wage will bring a general slow-down, Broome warns that hotels whose profits were poor in 1997 stand a high chance of failing in "the more difficult times ahead".