For the first time in 2003 both London and provincial hotels produced room Revpar growths.
London
London hotels are truly 'on a roll' now, having produced month on month improvement in trend for five of the last six months, indeed, for the last two months, that trend has broken into growth. Occupancies are now beginning to resemble those from the ‘golden days’ of 2000 and with London hotels filling again, hoteliers are able to seek higher paying customers. This was evident in the achieved room rates in October which actually increased on twelve months earlier – although (it has to be said) remaining some 13.4 per cent behind October 2000. British Airports Authority (BAA) has also reported improvements to their traffic figures in all their major markets. Critically, North Atlantic passenger numbers recorded by BAA showed their first monthly gain (up one per cent year on year) since February. Furthermore, Heathrow recorded its most improved month since January, with passenger numbers up by 2.6 per cent.
Provinces
Provincial hotels have seen more ‘ups’ than London in 2003 but, despite this, suffered a worryingly subdued third quarter. Reassuringly, provincial hotels made a real gain in October with a 2.1 per cent increase, built upon a combination of occupancy and rate growths. Occupancy reached 75.1 per cent and at that level is nearing its realistic operational ceiling. The bedroom stock would now appear to be filling sufficiently often to have tipped the scales from a buyers’ to a sellers’ market. If the current economic and market demand conditions remain in place without any further disruption, room rates should now be able to rise consistently from their last year levels.
Outlook
Reviewing current market conditions, Jonathan Langston, Managing Director TRI Hospitality Consulting stated, "The feelgood factor looks set to return to the harassed UK hotelier. Bedrooms are now beginning to become comfortably full and hoteliers can switch mode from survival to market optimisation. The last three years have seen the worst sustained downturn in memory and nobody will pretend that there isn't still a mountain to climb. The truth is, however, that we are actually now climbing it rather than sliding down into the precipice. Hotel operators’ first objective will be to record a full year of growth and then to recover towards a level of performance last recorded in the ‘golden days’ of 2000.
London will not achieve this Revpar growth in 2003 but the outturn figure will be less awful than looked possible just six months ago. Provincial hotels still have the opportunity if they can produce two solid months’ growth, to better the 2002 full year Revpar.
All the signs are now positive – we just pray that we do not suffer any repeat of the national and global disasters that have caused so much harm to the UK industry in the recent past."
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