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Hotel market outlook - Quarter 4 2009

Double-digit growth predicted for London hoteliers in 2010

Hotel market outlook - Quarter 4 2009

 

Background

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

  • Regional UK hotels reported the largest declines in revPAR in 2009, down 10.4%. This was the worst performance in the last 20 years when UK hoteliers suffered as a result of the combined effects of the 1991 Gulf War and the early 1990’s recession. On the flip side, London hoteliers reported more promising results, with revPAR falling just 3.9% for the year.
  • The model expects hotels in London to post double-digit revPAR growth in 2010, up 12.8%. This is a significant revision on the last outlook of 1.6% growth predicted. Whilst the risks seem to be all on the downside, with no further shocks, this could be the year that sees double-digit growth in the capital.
  • The 2010 outlook for Regional UK hotels is not as optimistic however, with steady and sustained growth expected during the course of this year and into next. As a result, revPAR is predicted to rise 6.3%. With occupancy growth now present across the UK, it does appear that Regional performance is now at a turning point. Although average room rates are still showing declines, this is not unexpected as they will lag occupancy in a recovery.

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