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Regions lead growth in hotel revenues

06 April 2006

UK hotel room revenue last year hit its highest level since 2001, according to the latest Hotel Britain survey by industry consultant PKF.

The 2.9% growth in average revenue per available room (revpar) to £59.92 means an average hotel room earns £21,870 a year.

The increase came on the back of higher average room rates, which rose by 3.7% to £81.71. This offset an overall 0.6 percentage point drop in occupancy that stemmed from falls in London and England.

In contrast to 2004, regional hotels performed better than those in the capital, with revpar up 3.3%. In London, revpar rose by a more modest 2.5%.

Despite London hotels suffering from a fall in tourist numbers following the 7/7 bombings, room yields in London hotels have recovered well. The report said that the capital's hotels compensated for falling occupancy by holding up room rates, in contrast to the heavy discounting that followed the
9/11 terrorist attacks. PKF said this strategy had helped improve yields.

London's first-class and luxury hotels showed the most robust revpar growth, up by 5.7% and 4%, respectively. This trend was reflected in the provinces, where hotels charging £70-£80 a night achieved a 4% increase.

Scotland was the best-performing region, with a 6.2% rise in revpar. The leading locations were Liverpool, Aberdeen and Gatwick, which all achieved double-digit growth.

Floundering at the bottom of the table for room returns were hotels in Swindon, Nottingham, Solihull, Birmingham Airport and Leeds.

PKF predicts hotel business will be tough in 2006, with spiralling energy costs, a worldwide cyclical slow-down and depressed consumer spending in the UK hitting returns. Nevertheless, it forecasts that revpar will grow by 5% in London and by about 2% in the regions.

By Angela Frewin

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