Profitability forecast to rise in London – but regions will have to wait until 2011

08 February 2010 by
Profitability forecast to rise in London – but regions will have to wait until 2011

London hotels are forecast to enjoy increasing profitability during 2010, according to industry consultant TRI Hospitality Consulting.

Overall, TRI predicts that this year hotels in the capital will experience a rise in revenue per available room (revpar) of 2.5% and occupancy growth of 1.5% this year. This will be fuelled primarily through an increase in international business demand as the leisure trade will remain at similar levels to 2009.

Meanwhile, hotels in the provinces are expected to have another tough year as domestic consumers restrict spending. It is predicted they will experience a slight dip in profitability during 2010, before accelerating to almost double-digit growth in 2011.

The increase in VAT, rising unemployment and the anticipated stringent government spending policy after the general election are all expected to reduce the domestic consumer's spending power. As a result, provincial hotels are likely to experience pressure for further rate reductions from the leisure market.

"Historically, the UK provincial hotel market has experienced a lag in recovery," said Jonathan Langston, managing director, TRI Hospitality Consulting.

"It is likely that corporates will continue to operate on tight accommodation/travel budgets, with little or no scope for hoteliers in the provinces to enhance rate to the commercial sector."

In 2010, achieved total revenue per available room (trevpar) and gross operating profit per available room (GOPpar) is forecast to decrease by 2% and 3.2% respectively, with an increase in trevpar and GOPpar projected for 2011 of 4% and 9.1% in 2010.

For the London market, TRI forecasts a 2.8% increase in trevpar and 3.5% increase in GOPPAR in 2010, with a increase in trevpar of 4.8% and GOPpar of 7% in 2011, year-on-year.

UK hotels face most challenging period for 17 years >>

London hotels boosted profitability by 23% in December >>

Revpar boost brings optimistic start to new decade for London hotels >>

By Janet Harmer

E-mail your comments to Janet Harmer here.

If you have something to say on this story or anything else join the debate at Table Talk - Caterer's new networking forum. Go to jobs
Looking for a new job? Find your next hotel job here with jobs

Blogs on]( Catch up with more news and gossip on all Caterer's blogs
[Newsletters For the latest hospitality news, sign up for our e-mail newsletters.
The Caterer Breakfast Briefing Email

Start the working day with The Caterer’s free breakfast briefing email

Sign Up and manage your preferences below

Check mark icon
Thank you

You have successfully signed up for the Caterer Breakfast Briefing Email and will hear from us soon!

Jacobs Media Group is honoured to be the recipient of the 2020 Queen's Award for Enterprise.

The highest official awards for UK businesses since being established by royal warrant in 1965. Read more.


Ad Blocker detected

We have noticed you are using an adblocker and – although we support freedom of choice – we would like to ask you to enable ads on our site. They are an important revenue source which supports free access of our website's content, especially during the COVID-19 crisis.

trade tracker pixel tracking