UK hotels experiencing decreased growth

According to Deloitte, who specializes in financial advisory services, the hotel industry in the United Kingdom is slowing down.  Based on the average of revenue gained per available room, hotels in the UK for the first half of this year have only grown about 3.5 per cent compared to last years growth of 6.7 per cent.  This lower percentage of growth this year signifies the worsening economic conditions in the country.

At Deloitte, John Antoniazzi, who is a partner of the firm said that “Although hotel performance growth is slowing, the industry has been able to increase nominal room rates despite marginal occupancy declines. The ONS International Passenger Survey showed no change in the number of visitor arrivals, and while visits from North America were down, this is being counteracted by an increase in arrivals from the Middle East and Asia. This presents hoteliers with opportunities for success over this economically challenging period.”

Antoniazzi also said that “The decline in consumer confidence is likely to have a knock-on effect for the hotel industry. The last recession was characterized by an initial decline in occupancy rates, followed by a fall in room rates.  Hoteliers need to consider how they will respond if consumer spending tightens further.  The inclination in tough times is to respond by cutting prices. However, once average room rates fall, it becomes difficult to move them back up. In the long term, incentives that will boost occupancy such as a minimum night stay over busy periods or a two-for-one offer may work out to be a better strategic option.”

www.deloitte.com