Hotels on both sides of the pond count cost of recession

In such a period, the American market, with a mature, competitive, branded hotel landscape, with approximately 67 per cent of the rooms estimated to be affiliated to chains and with over seven times as many rooms as the UK, provides a useful reference point.

The recession on both sides of the Atlantic has sharpened the focus on value for money for business and leisure travellers. Corporate belt-tightening means that business travellers have had to trade down. For leisure travellers, there is a wait-and-see approach, to focus on maximising value. Short breaks are being jettisoned in favour of a main holiday. Younger travellers are shopping around more and older travellers are asking for discounts.

The metric to watch for hotels is 'RevPAR', revenue per available room. Typically it lags GDP changes (historically in the UK by six to twelve months) and the UK has, in turn, lagged the US by two to three quarters. However, this recession has proved different, with both US and UK RevPAR turning down in a similar timeframe, the US in the third quarter of 2008 and the UK in the fourth quarter. In America, leisure travel has held up better than commercial travel in many markets, with weekday occupancy rates falling further than weekend rates.

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Source - The Times

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