London hoteliers have been warned to prepare for a tough period of trading during 2013 as the warm glow of optimism created by the Olympic and Paralympic Games gradually fades.
Gareth Banner, general manager of the Hempel hotel in London's Notting Hill, told a meeting organised by Boutique Hotel News to discuss business during the post-Olympic period that it would be prudent for hotels to prepare for budget decline next year.
He said a downturn in business was likely to occur because of the 10% increase in supply of accommodation - amounting to around 11,000 additional bedrooms - in the run up to London 2012, many of which are in the luxury sector.
"Hotels will also feel the impact of the ongoing recession as well as suffer from the spotlight moving away from London to other destinations," he said.
Banner went on to say that hotel business could also be adversely affected by the ruling from the Advertising Standards Authority, which will require all advertised room rates be inclusive of VAT by 17 September.
The meeting was told by Banner that the Hempel had enjoyed a "fantastic Olympics" during which a corporate client had taken exclusive use of the 50-bedroom hotel for three weeks, achieving a 100% increase on revenue per available room, year-on-year.
"It was an unprecedented piece of business," he said. "As a boutique hotel, we were under the radar of LOCOG (London Organising Committee of the Olympic and Paralympic Games) and our director of sales of marketing went out to look for the business. It took two years to negotiate and cost £10,000 in legal fees to draw up the contract."
Looking to the future, Chris Foy, head of the 2012 games unit at VisitBritain, said that there is business to be won with London benefiting from the feelgood factor created by the games, particularly by the successful welcome provided by the volunteers and local people.
"The message we have put out to hotels is that the Olympics was our moment to shine and secure long term business," he told the meeting.
"One of the biggest tourism marketing campaigns to ever run will begin on 10 September - the day after the closing ceremony of the Paralympic Games - with the aim of encouraging four million extra visitors to the UK per annum and spending an additional £2b." Currently around 30m overseas visitors travel to the UK each year.
Foy added that in particular VisitBritian hopes to drive an increase in visitor from China from 120,000 to 500,000 by 2014/15, but admitted that this will be challenging until current visa regulations are relaxed to put the UK on a level playing field with other European countries.
By Janet Harmer
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