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Regional occupancy figures show signs of recovery

21 July 2010 by
Regional occupancy figures show signs of recovery

Hotel occupancies in the UK regions have increased during the first half of 2010 following two years of decline, according to figures from the business advisory firm Deloitte.

It is hoped that the 4.2% rise in occupancy to 65.8%, between January and June this year, signals the start of a recovery in the regions.

Although average room rates are yet to see growth, they are showing signs of stabilising, falling just 2.3% (to £66) for the period, just £2 short of the same period last year. As a result, revenue per available room (revpar) for the first half of 2010 grew 1.7% to £43.

Meanwhile, Deloitte, reports that London saw revpar rise by 9.3% to £102 during the first half of 2010. Average room rates were the key driver of growth, up 7% to £129, while occupancy rose 2.1% to 78.9%.

STR Global, which analyses hotel performances, has also seen signs of improvement in the regions and is predicting a 5.3% rise in revpar for 2010.

However, Marvin Rust, hospitality managing director at Deloitte, said that it was still early days in the recovery cycle. "With the regions more susceptible to national influences than the London market, the effect of fiscal tightening and spending cuts remain hard to predict at this time," he added.

MAJOR GROUPS

Figures available to date from the major hotel groups generally back up Deloitte's and STR Global's data.

The 40 properties operated by Choice Hotels Europe, 23 of which are outside the M25, have shown increases in revpar of 8% and occupancy of 6% for the first five months of the year compared with the same period in 2009.

"Encouragingly and contrary to Deloitte's figures, Choice's average daily rate has increased over the same period, albeit not to the same degree as revpar and occupancy," said Duncan Berry, UK chief executive at Choice Hotels Europe.

"Occupancies remain above their market share for the majority of Choice properties when compared with their competitive set across the UK and we continue to work proactively with the hotels on the revenue management strategies to ensure they are maximising all available opportunities."

InterContinental Goup's Holiday Inn and Holiday Inn Express brands in the UK regions turned a corner in February when the occupancy fall of 0.8% during January moved to a 0.8% increase. March showed an even great occupancy rise of 1.8%.

CAUTIOUS

Hilton Worldwide, meanwhile, is more cautious about an improvement in regional hotel business. While the company's 20 hotels in London have enjoyed the best business levels in June and July for four years, Simon Vincent, area president of Europe for Hilton Worldwide, said that regional hotels were still finding business challenging with the corporate and meetings market yet to return.

"This is, however, outside of the major tourist destination cities such as Edinburgh, where they are seeing strong occupancy and room rate levels," he said.

Independent hotels at the top end of the market are reporting buoyant business, with Pride of Britain, which represents 36 regional and two London hotel, taking 12% more bookings at its central reservations during the first half of this year, compared with the same period in 2009.

One of its members, Calcot Manor Hotel and Spa in Gloucestershire, has achieved an average occupancy figure this year of 73.86%, an increase of more than 5% year-on-year. Average room rate for the same period is up by £2 to £182.

General manager Paul Sadler said that strong leisure business had replaced corporate and conference bookings, which were still considerably down in numbers.

"We are seeing huge repeat leisure business with more people holidaying in the UK," he said. "Generally people are fed up with the chaos in the airports caused by the BA strikes and ash cloud. There are definitely more people now taking a couple of two- to three-day breaks in place of a two-week holiday abroad.

"Looking ahead, we are full every weekend until the end of August and are confident that the business will come in the rest of the time, although it is coming in later than it has ever done before."

- - - - - - -
- - Occupancy Change Average room rate Change Revpar Change
Regional UK - 65.8% - 4.2% - £66 - -2.3% - £43 - 1.7%
London - 78.9% - 2.1% - £129 - 7.0% - £102 - 9.3%
- Source: Deloitte - - - - - -

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By Janet Harmer

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