prices of midmarket rooms stay buoyant

By Angela Jameson

Room prices in midmarket hotels will continue to increase in 1998 because there are enough bookings to persuade hoteliers that they don't have to cut prices, says a specialist consultancy.

BDO Hospitality Consulting based its prediction on the performances of 300 three- and four-star UK chain hotels in the 12 months to December 1997.

BDO Hospitality's figures show that average UK room occupancy was static but sustained in 1997 at 75.7% - just 0.2% growth over 1996.

At the same time a 9% increase in room rates to £59.61 was achieved by a combination of price rises and a decrease in discounts.

"Seasonality factors have limited volume growth, so hoteliers have done well to achieve growth above the level of inflation by means of effective yield management," said Jonathan Langston, joint managing director of BDO Hospitality Consulting.

London hotels increased average room rates by 11.5% from £68.53 in 1996 to £76.42 in 1997. This was achieved by reducing discounts. But occupancy in the capital did fall slightly from 86.1% in 1996 to 84.8% last year.

London hotels' total revenue reached £36,325 per available room - 8.1% up on 1996. Provincial hotels saw their revenue per available room rise 8.5% to £30,886 in 1997.

Average room rates grew strongly in provincial chain hotels where, unlike their London counterparts, occupancy also rose from 72.2% to 72.8%.

Langston said: "Notwithstanding renewed conflict in the Gulf, there is nothing on the horizon to diminish demand levels."