Hotel occupancy in London in 2013 will hit lowest level since 2005 says PwC

05 November 2012
Hotel occupancy in London in 2013 will hit lowest level since 2005 says PwC

Hotel occupancy in London in 2013 will drop to its lowest level since 2005 as the capital suffers the ill effects of a post-Jubilee and post-Olympic hangover.

That's the assessment of PricewaterhouseCoopers, which has warned of a "hotel hangover" in London. PwC said that London's occupancy figures for 2012 would stand at 80%, a fall of almost two percentage points on 2011. And it would fall again to 77% in 2013 - its lowest level in seven years.

Meanwhile the London Average Daily Rate (ADR) should end 2012 at a record high of around £143, £10 higher than 2011, which was also a record year. PwC said this would help drive revenue per available room (revpar) to rise 4% to a record £114.71 this year.

But in 2013, revpar is forecast to fall back by 7% to £106.42, as supply issues, the economy and comparisons with the 2012 Games weigh negatively.

Liz Hall, head of hospitality and leisure research at PwC, and author of the PwC UK hotels forecast 2013, said: "The London hotel market has demonstrated remarkable resilience since the start of the recession. This has been helped by one-off events such as the Jubilee and 2012 Games, which have driven some highs and lows (reduced business travel) this year. It's hard to feel confident about 2013; there will be winners but a weak economic and travel environment, a fight for market share and more new rooms to fill mean many will feel the hit."

In the regions, location was key to success. Although many cities had a tough year as the Olympics scared off visitors, other cities like Aberdeen and Belfast enjoyed stronger performances. In the case of Belfast, the new Titanic Belfast exhibition helped to draw in visitors.

Poor weather in the first half of 2012 dampened holiday demand and is expected to drag down occupancy by 2.8% to almost 69% in 2012. PwC said it only anticipated a marginal further decline to 68% occupancy in 2013.

PwC expects the regions to see a marginal ADR gain this year to £58.39, the fourth consecutive year ADR has languished at around £58. Looking to 2013, PwC said it didn't expect any significant change to ADR.

PwC also predicted that the regions would see a 2.8% decline in revpar in 2012 predicted that this would change little in 2013.

By Neil Gerrard

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