Hotel trading: March

London hotels took a major hit from the war in Iraq and its build-up during March, with a sharp drop in both occupancy and room rates - and further falls are expected in April.

With fewer international visitors, occupancy across 157 London hotels dropped to 67.1% in March, down by 10.3% compared with March 2002, while the average room rate slipped by 4.1% to £88.22. This led to a massive drop in rooms yield in the capital, from £68.85 to £59.22, a drop of 14% compared with the same month last year.

The fall is particularly significant when taking into account that the traditionally quiet Easter bank holiday fell during March in 2002.

"The figures for March show quite clearly that international travel was tremendously affected and London hoteliers have been hard hit, while regional hotels have failed to rally," said Melvin Gold, managing director of hotel consultancy services at PKF.

In the regions, average occupancy among the 597 hotels surveyed fell 0.4% to 67.8%, while average room rate edged up by 0.5% to £60.39. This left rooms yield virtually static at £40.93, compared with £40.92 last year.

A gloomy picture is expected next month, particularly in London, due to the Easter weekend in the middle of the month and the run-up to the May bank holiday weekend at the end of April.

"We may even see international issues such as the outbreak of the Sars virus in Asia having further impact on the already battered London market," said Gold.