Annual hotels report reveals resilience of sector

Hotel rooms in the UK generated an average daily yield of £59.92 in 2005, the highest level since 2001, according to Hotel Britain 2006, PKF’s definitive guide to the performance and prospects of the UK hotel industry. The average hotel room in the UK now ‘earns’ £21,870 a year. The annual growth of 2.9% in 2005 was primarily driven by higher average achieved room rate (AARR), which rose 3.7% to £81.71 rather than occupancy, which fell slightly by 0.8% to 73.3%. In contrast to 2004, regional hotels performed better than those in London with a growth in rooms yield of 3.3% to £48.08. London hotels were hit by the aftermath of the July bombings but still managed a solid annual increase of 2.5% in rooms yield to £83.13 (although the August 2005 rooms yield fell to £66.31). Given the drop in occupancy levels, hoteliers achieved this improvement by holding their nerve on room rates, which turned out to be a better yield management strategy than heavy discounting. Regional hotels also achieved their rooms yield growth by higher AARR, particularly those charging £70-80 a night, which managed to achieve a 4% increase. Scottish hotels outperformed their Welsh and English counterparts during 2005 with an impressive 6.2% yield growth to £50.98 (compared with £48.91 for Wales and £47.20 for England). It is likely that the terrorist attacks in London drove domestic and international visitors north while Welsh hotels continued to be buoyed up by the series of large events held at Cardiff’s Millennium Stadium during the year. Top of the league with double-digit rooms yield growth were Liverpool, Aberdeen and Gatwick with 16.9%, 15.7% and 11.4% respectively. A vibrant programme of events to promote Liverpool’s Cultural Capital of Europe 2008 helped to fill up hotel rooms, while the revival of oilrig activity and several large conferences helped to feather Aberdonian beds. Gatwick’s good performance resulted from ever-increasing numbers of outbound and inbound air travellers plus a much stronger AARR for refurbished hotels. At the other end of the scale, the worst performing locations were Nottingham, Solihull & Birmingham Airport and Leeds with drops in rooms yield of 6.5%, 2.5% and 1.7% respectively. Between 2001 and 2005 the best performing region was Sheffield, with a compound annual growth rate (CAGR) of 7.8% since 2001, while the worst was Swindon with a negative CAGR of 2.4%. PKF head of hotel consultancy services Robert Barnard said: “This year’s survey reveals the fundamental strength and resilience of the UK hotel market. The first two months of 2006 are already showing positive growth in both London and the regions and, barring any environmental disasters, sickness epidemics or large-scale terrorist activity, we expect rooms yield growth to reach around 5% in the capital and 2% in the regions. In the longer term, the 2012 Olympics should also boost hotel performance throughout the country.”

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