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Hotel market outlook

Quarter 3 2009

Hotel market outlook



Hotel market outlook capitalises on Deloitte’s extensive knowledge of the hospitality industry, enabling us to provide commentary and analysis on future trends, as predicted by the e-forecasting model, as well as historic ones. The outlook is produced using data from a consistent sample of hotels collected by STR Global Limited. This data is input into an econometric model developed by the independent economic research firm, e-forecasting Inc, to produce hotel performance outlooks for the London and Regional UK markets.

Key findings

  • In Q3 2009, Regional UK hotels reported the largest declines in revPAR, down 10.3% driven primarily by average room rate declines. London hoteliers reported more promising results, with revPAR falling 6.7%.
  • The model expects hotels in London to see further improvements in revPAR during Q4 2009, falling 3.5% - a 5% improvement on the previous forecast of -8.5%. However, I expect that the capital will ‘smash’ the model’s predictions and report positive revPAR growth for the quarter, as October and November results saw the capital post growth.
  • The year-end outlook for Regional UK hotels is gloomier than previously forecast, with revPAR down 10.0% led by deterioration in average room rates. I believe that the outlook for Regional UK hotels will be more difficult than predicted however, as occupancy is still falling, an indication that 2010 will be a great deal tougher than the model is currently predicting.

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