UK chain hotels are facing the most challenging trading conditions in 17 years, according to market analyst TRI Hospitality Consulting (TRI).
The report predicts that London will experience a 10% drop in revenue per available room (revpar) this year followed by a further 0.5% dip in 2010.
Outside the capital revpar is expected to decline 8% in 2009 and a further 2% in 2010, based on the assumption that the UK economy will contract 1.7% in 2009, returning to growth of 0.2% in 2010.
Inbound visitor numbers, which account for more than half of London hotel overnight stays, are estimated to have decreased 2.7% last year and will fall by a further 0.7% this year, according to VisitBritain.
Jonathan Langston, managing director, TRI Hospitality: "VisitBritain's forecast for inbound tourism in 2009 might seem fairly modest in the light of the widespread global downturn.
"Yet, if it continues, the low value of sterling against most major currencies may have a moderating effect on anticipated reductions in inbound tourism. For the first time in many years London must appear a good-value destination."
TRI predicts, like the recession of 1991, that there will be only one full year of recession in the UK for the hotel sector, followed by a year of modest recovery.
"UK hotels are better prepared for recessionary times than they were in 1991 due to a combination of structural reforms to cost bases during the intervening years and far greater access to markets through today's enabling technologies," Langston added.
By Gemma Sharkey
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