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London hotels have bounced back, new figures confirm

24 January 2005 by
London hotels have bounced back, new figures confirm

London's hotels comprehensively bounced back last year after the woes of 2003, when the market was badly hit by the war in Iraq, according to new figures.

A study by online hotel benchmarking service The Daily Bench found a 13% increase in revenue per available room (revpar) in 2004 when compared with 2003.

But while growth is still continuing, the recovery remains fragile, it warned.

The study of London four- and five-star hotels, which also covered the first two weeks of January this year, reported a similar increase in occupancy levels and average room rate growth of approximately 6%.

Both four- and five-star hotels reported revpar growth in double figures, with four-star hotels reporting the greatest gains in average rate, which were up by 6.3% to £88.15.

In the five-star market, occupancy saw the greatest increase, up by 5.1 percentage points to 73%.

James Chappell, managing director of The Daily Bench, said the figures, while encouraging, needed to be viewed in the context of the severe decline suffered by the trade in the run-up to and during the Iraq war, particularly when comparing January to June 2004 with the same period in 2003.

"For example, April 2004 revpar increased by 38%. Revpar growth during the second half of the year slowed quite dramatically, culminating in an increase in October of only 1.8%," he cautioned.

Average room rate was £133.97 in 2004 compared with £126.04 in 2003, an increase of £7.93 or 6.3%.

July showed the strongest growth, up by £15.62 or 12.5%.

Occupancy during 2004 was 77.2%, against 72.6% in 2003, showing a growth of 4.6 percentage points or 6.3%, Chappell added.

And revpar during 2004 was £103.37, compared with £91.45 in 2003, a rise of £11.92 or 13%. April 2004 was the strongest month, up by £25.28 against the same month a year earlier.

Looking at four-star London hotels, the average room rate increased by £5.19 (6.3%), from £82.96 in 2003 to £88.15 in 2004, said The Daily Bench.

Occupancy went up by 4.3 percentage points (5.6%) to 80.4%, and revpar reached £70.88, an increase of £7.70 (12.2%) compared with £63.18 in 2003.

Occupancy increased by 5.1 percentage points (7.4%) to 73.0%, and revpar saw a £17.09 (13.4%) increase from £127.39 to £144.47 in 2004.

But the outlook was not all rosy, Chappell warned.

"Whereas growth continued in November and December, as well as through the first two weeks of January this year (which saw a 3.4% increase in revpar relative to the first two weeks of 2004), the recovery is still fragile."

He added: "Of mounting concern for the hotel industry is the continued weakness of the US dollar against sterling."

by Nic Paton

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