London Olympics to slow rate of UK hotel recovery next year

17 September 2010 by
London Olympics to slow rate of UK hotel recovery next year

The 2012 Olympic Games could harm the strength of the UK hotel recovery, especially in host city London, according to new research.

Released today, the latest PricewaterhouseCoopers (PwC) Hotel Forecast predicts that London's soaring recovery is set to continue during the next year.

However, a surge of new room supply ahead of the Olympics could depress revenue per available room (revpar) growth in 2011, especially in London.

At present PwC predicts London hotels will achieve record room rates of £130 in 2011, with improving economic conditions, the return of the business traveller and international demand all set to keep the capital's hotels motoring.

London revpar growth should finish 2010 up 8.9% at £101.28, and with strong rate, and occupancy growth forecast for 2011 PwC predicts revpar growth of 9.3% next year to £110.65.

But although the Olympics is generally seen as a sales opportunity for the industry, especially welcome at a time when the provincial hotel market is struggling to get back on its feet (see right), London is likely to suffer if too much new accommodation is dumped on to the market before the games.

PwC predicts that if the maximum new rooms currently planned are put in place ahead of the London Olympics - some 4,305 - next year's revpar growth in the capital will be pegged back from 9.3% to 5.7%.

Liz Hall, head of hotels research at PwC, said: "Hotels that are expanding to capture Olympic trade alone are rather missing the point.

"The impact should be positive but short lived and will be dependent on location. On the flip side, some leisure visitors may well shun London at all costs to avoid congestion or security fears."

Hotel industry could still miss out on Paralympic Games business >>

Hotels could suffer as 2018 World Cup bid lies in ruins >>

Website launched to help tourism firms benefit from the Olympics >>

By Chris Druce

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