While hotel performance for the last two weeks has been optimistic, the second attack will have a significant impact on the recovery time of the London market

The second terrorist events in a fortnight will further challenge the London tourism market in wooing tourists to the capital. While initial analysis in response to the first incidents in London two weeks ago was that recovery would be swift, the latest incidents will have a significant impact on the recovery of London hotels.

HotelBenchmark Survey results for the period following the immediate aftermath of the 7th July terrorist attacks, showed that London occupancy levels have exceeded those of 2004 through dates 14th – 16th July (Thursday – Saturday), with 2005 figures showing hotels have 75% of rooms filled compared with 73% in 2004 (Sunday is not comparable due to Farnborough International Air show 2004).

On average, the same dates saw rooms selling for around £10 cheaper than they were in the same period last year – evidence that in the short term, there has been payback from the special promotions released by hotels and distributors to attract people back to London. Room rates this year for this period were on average £143, compared with £153 in 2004.

Alex Kyriakidis, Global Head of Tourism, Hospitality and Leisure at Deloitte, says: “Hoteliers are maintaining their nerve and holding their rates, which has proved key in other crises to ensuring a quick recovery in profitability.  It is much easier to drop rates than to pull them back up again.  Hong Kong is enjoying record levels of hotel profitability because, throughout the SARS crisis, the hoteliers held their rates. Once demand returned, profitability quickly recovered to pre-SARS levels and beyond.

“With the second attack in London, both business and leisure tourist confidence will weaken and it is confidence that determines choice of destination.  With some 65,000 branded hotel rooms to fill, London hoteliers will no doubt offer special promotions to ensure that high occupancies are maintained. European’s make up around 70% of the visitors to London and are typically more resilient to terrorism attacks than their US and Asian counterparts.  However a period of stability is now critical to stave off a crisis in London’s tourism arrivals,” adds Kyriakidis.

Ends

About Deloitte
In this press release references to Deloitte are references to Deloitte & Touche LLP.

Deloitte & Touche LLP is the UK's fastest growing major professional services firm based in 21 UK locations, with over 10,000 staff nationwide and fee income of £1,246 million in 2003/2004. It is a member firm of Deloitte Touche Tohmatsu, a leading professional services organisation, delivering world class audit, tax, consulting and corporate finance services, with around 120,000 people in over 140 countries. Deloitte Touche Tohmatsu is a Swiss Verein, and each of its national practices is a separate and independent legal entity.

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The information contained in this press release is correct at the time of going to press.