UK hotel market is ‘past its peak'

The UK hotel market has passed its cyclical peak, and bedroom occupancy is set to fall further this year, according to the annual UK Trends survey, published by Pannell Kerr Forster.

The hotel sector's average occupancy decreased by 1.4% to reach 75.8% in 1999-2000.

This follows an improvement in the hotel sector's average occupancy, peaking at a 19-year high of 77.7% in 1997-98 following the recession of the early 1990s.

Melvin Gold, director of Pannell Kerr Forster, hotel, leisure and tourism, predicts a "soft landing" for UK hotels this year and in 2001. "I expect hotel occupancy in the UK as a whole to fall further during the millennium year, while average rate should find room for slight growth," said Gold.

"In 2001 we can expect to see stronger evidence that rooms yield has passed its cyclical peak, although it will be a soft landing. Predictions of the underlying strength of the British economy mean that the hotel sector is likely to pick up as early as 2002," he continued.

The London hotel market has showed resilience in comparison with the rest of the UK. Occupancy in 1999-2000 dipped by 0.9% but at 82.6% remained some 10 percentage points ahead of the rest of the country. Average yield for London hotels increased by 1%.

"London is benefiting more than the rest of the UK due to interest in the new millennium attractions, but there's not going to be the same rush next year," said Gold.

by Lois Jones

Source: Caterer & Hotelkeeper magazine, 31 August - 6 September 2000