Hope for UK hotel industry after worst half yearly trading since 1996

UK hotels have suffered their worst first half occupancy and revenue levels since 1996, according to preliminary figures released today by Deloitte & Touche.

The HotelBenchmark Survey shows hotel occupancy levels averaged 69 per cent for the first six months of 2003, a fall of 2 per cent on the same period last year. London hotels fared worst, with occupancy declining 9 per cent to 69 per cent, which compares with 82 per cent for the record first half of 1997.

Marvin Rust, travel, tourism and leisure partner at Deloitte & Touche, said: "War and SARS compounded the already challenging operating conditions for hoteliers brought on by economic uncertainty, with falls in international visitors affecting the city in particular.

"Encouragingly, while London occupancy levels hit a low of 59% in April coinciding with the Iraq conflict, performance has been improving steadily since then, rising to 78% in June. With the best months of the year for the industry still to come, we should see occupancy levels continuing to rise, albeit slowly."

With occupancy levels down, hoteliers have been forced to reduce prices to attract visitors. Room rates in London have fallen the most, with the average room rate for the first half of 2003 at £96, a drop of nearly £7 on the same  period last year. The combination of fewer occupants at reduced prices pushed hotel revenues per available room (revPAR) down to £65.81, which compares with £77.39 for the first six months of 2002 and the high of £93.34 in 2000.

For the UK as a whole, room rates fell by £3.34 and revPAR was recorded at £48.83, compared with £52.16 for the same period last year.

Marvin Rust commented, "Hoteliers have had little choice but to drop room rates to attract visitors. However, despite the recent challenges, a greater fall in prices was actually recorded in the first half of 2002, when London room rates were down £14.46 on the same period in the previous year. Hoteliers have been wise to avoid making further substantial falls in prices as historical  trends suggest that once rates are reduced it can take years to bring them back up to former levels."