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Hotel recovery will continue through 2005, predicts TRI

02 February 2005 by

UK hotels can expect to repeat in 2005 the strong growth they achieved last year, according to TRI Hospitality Consulting.

TRI's latest survey of 510 corporate chain hotels found that the sector boosted overall revenue per available room (revpar) by 7% in 2004, reversing three consecutive years of decline.

Arguing that a strong economy, low inflation rate and an anticipated peaking of interest rates will outweigh the fear of terrorism and the weak dollar, TRI has upgraded its forecast revpar growth for 2005 to 9% in London and 5% in the provinces.

"There remain risks but, with a stable political, social and economic climate, we believe an optimistic view is the appropriate one," said Jonathan Langston, managing director at TRI.

Most of this growth will come from raising room rates. "With occupancy now close to a plateau, the majority of this year's revpar increase will be driven by rate," said Langston.

This pattern is indicated in December's figures, which showed a stagnation in occupancy levels in London and a fall of 0.6 percentage points in the provinces. Room rate, on the other hand, edged ahead by 5% and 2.8% respectively.

London hotels led the recovery in 2004, boosting revpar by 12.6% to £71.24. This growth sprang from a 7.3% rise in room rate to £88.07 and a 3.8 percentage-point increase in occupancy to 80.9%.

Provincial properties saw a more moderate increase in revpar, which rose by 4% to £45.09. Room rate grew by 2.5% to £63.72 and occupancy edged ahead by 1 percentage point to 70.8%.

The London hotel market was buoyed up by a recovery in overseas visitors, who totalled 25.2 million in the 11 months to 30 November to surpass the 12-month record set in 2000.

But lower levels of visitors from Western Europe and the high-spending North American market mean that spending is unlikely to match 2000's record £12.8b.

Overseas visitors spent £11.8b over the first 11 months of 2004 and UKinbound (formerly the British Incoming Tour Operators Association) is predicting a full-year spend of £12.5b.

by Angela Frewin

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