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Deloitte warns of uncertainty in 2008 for hotels' performance

04 January 2008 by

It will be a brave man that predicts a 2008 as strong for hotels as last year given the ongoing credit crunch, according to a leading consultancy.

Roger Bootle, economic advisor at Deloitte, has predicted that 2008 will be a challenging year for businesses reliant on consumer spending from London.

Deloitte predicts consumer spending growth will slow from a growth rate of 3% to 2% this year.

"This will have a direct knock-on effect on the businesses that rely on the City for their trade, including hotels, bars and restaurants," said Bootle.

Last year was a strong year for hotel revenues in London.

Between January and November 2007 revenue per available room (revpar) rose 10.8% in the capital compared with 4.4% in the rest of the country.

Marvin Rust, hospitality managing partner at Deloitte, said: "The question is how much longer double-digit growth can continue. So far, the UK hotel industry appears unscathed by troubles across the Atlantic and at home, but with an increasingly gloomy global outlook it would be a brave man to predict that 2008 will be as good as 2007."

London's 10.8% growth in revpar came on top of growth of 16.8% in 2006. Average revpar has increased from £99 to £110, to reach its highest level since 2000 in the capital.

Rust also predicted the credit situation was unlikely to impact on new hotel developments: "Although the cost of financing new developments may have risen, with land scarce and hotel projects having long build times I expect these to continue largely unaffected.

"New supply will remain subdued and demand is strong with the increasing focus of the world on London as we head for 2012."

UK hotel market remains strong >>

Caterer's predictions for 2008 >>

Read more on trends & data here >>

By Christopher Walton

E-mail your comments to Christopher Walton here.

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