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Northern hotels see strong revpar growth

06 December 2004 by
Northern hotels see strong revpar growth

The UK's regional hotel market is still dominated by Heathrow and Gatwick, but cities in the north-east of England are now giving the airports a run for their money, a survey has suggested.

According to the latest HotelBenchmark Survey from consultancy Deloitte, Gatwick topped the table when it came to growth in revenue per available room (revpar), closely followed by Heathrow.

But Sheffield, Leeds and Newcastle have seen their fortunes transformed in recent years, and the hotel market in the cities is now growing fast.

The survey, which excluded hotels in London, found that Gatwick led the pack with 14% revpar growth in the year to October, on the back of increased passenger traffic.

Heathrow reported revpar growth of more than 10%, fuelled by occupancy gains and passenger increases, said Deloitte.

Sheffield, by comparison, reported an 11% revpar rise through a mix of occupancy and rate growth.

Despite this, an underperformance in average room rates meant Sheffield still trailed the regional UK average in terms of absolute revpar, said Deloitte.

"Part of the problem is that Sheffield lacks the volume of high-rate corporate business evident in other markets.
"Additionally, it does not have the level of penetration in respect of weekend leisure business enjoyed by other UK cities such as Manchester or York," it said.

Leeds, with the highest proportion of upmarket and deluxe rooms in the region, achieved the highest average room rate of the three northern cities and saw the biggest growth after Gatwick.

Its revpar increased by 10.5% for year to October.

Newcastle was also going through "a phase of transformation" and there was lots of growth potential, predicted Deloitte.

Overall, revpar growth was consistent across the top five markets in the UK regions and, with the exception of Gatwick, just 0.8 percentage points separated the top and bottom performers, it added.

"There is every possibility we could see a change in line-up as the year draws to a close," said Deloitte.

It forecast year-end regional UK revpar increasing by 4.8% compared with 2003, although this would slow slightly to 4.3% in 2005.

by Nic Paton

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