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London's hotels riding out economic storm

by LLB Editor
28th Sep 11 11:59 am

London’s hoteliers appear to be weathering the economic storm after recording high room rates and occupancy levels in the second quarter, according to a report.

Strong demand from international business and leisure visitors helped London perform relatively well, according to PwC’s UK Hotels Forecast. Visitors from the capital’s traditional markets in the US, France, Germany and Spain were joined by tourists and businessmen from emerging areas, such as Brazil, China and India.

However, the sovereign debt crisis, slowing prospects in the US and the gloomy economic outlook in the UK and abroad mean demand levels are expected to be lower than those forecast earlier this year, according to the report.

The average daily room rate for London hotels is expected to go up by 8.9 per cent in 2011 to reach £134.50, an increase of £11 on last year’s figures.

Room rates increased by 12 per cent in the first half of the year, with an improvement in corporate conditions increasing the number of midweek stays. The average daily room rate increased by eight per cent in the first quarter and 15.1 per cent in the second compared to the same periods in 2010.

PwC’s report forecasts a further increase in rates in the second half of the year, although the growth is not expected to be as dramatic due to tough comparatives from last year and a slow in demand. A 9.2 per cent increase in average daily room rates is predicted for the third quarter and a rise of 3.7 per cent is forecast for the year’s final quarter.

Occupancy levels of London’s hotel rooms was measured at 75.8 per cent in the first quarter, down 1.4 per cent on the same period last year. STR Global’s data showed occupancy levels rose by 2.1 per cent in the second quarter, despite the royal wedding not delivering a trading boom.

July saw occupancy levels hit 92 per cent, just 0.2 per cent below the record set last year, despite the capital not enjoying the best weather conditions during the summer. Occupancy levels in the seven months to the end of July were up by 0.4 per cent to 82 per cent, according to the report. A decline of 0.8 per cent in occupancy levels is expected over 2011 as a whole.

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