Since June 2002 the performance of regional UK hotels has been slowly recovering with occupancy levels advancing over 2001 levels. Average room rates have also moved ahead of 2001 levels in all but September when a 1.2% decline was reported. As a result the industry has witnessed growth in revPAR for the last six months of the year. In December regional UK hotels reported a marginal decline in occupancy of 0.4% but combined with a 1% increase in average room rates, revPAR grew 0.5%. 

Julia Felton, director of travel, tourism and leisure at Deloitte & Touche said, "The market appears to have reached the bottom of the cycle with regional hotels drawing many of the 'would be' international travellers who have been put off venturing further afield. With demand sustained, hoteliers have not entered into significant price discounting, with average room rates in 2002 averaging £63 just marginally down on 2001 levels. In real terms average room rates are still approximately £2.50 adrift of the highest rates and so we anticipate some advance in average room rates during 2003, notwithstanding any conflict in the Middle East."

In London, hotel performance was more mixed. Occupancy levels have held up, with all London hotels reporting occupancy levels for 2002 of 75%. This performance is slightly below the long-term average occupancy for the market of 78% and significantly ahead of the 66% recorded at the lowest point during the Gulf War. 

However, to stimulate demand, London hoteliers have had to discount prices resulting in average room rates falling 6.5% to £95. In all bar one month � November � London average room rates have fallen compared to 2001 levels in part due to the differing mix of clients that the hotels are now attracting. Encouragingly, it appears as though the rate of decline is slowing with hotels reporting a 1.2% decline in average room rate in December, compared to the double-digit declines experienced at the beginning of the year. 

Marvin Rust, partner of travel, tourism and leisure at Deloitte & Touche noted: "The performance of the London market is currently at odds with that of many other major European capital cities which generally have been able to increase average room rates during 2002. However, this has been achieved at the expense of occupancy, which has fallen in most of the major European capital cities. London hoteliers have adopted a different strategy of stimulating demand by price discounting. Lower average room rates are in part an effect of the changing mix of guests that hotels are attracting as low-rated leisure business is filling the void left by the decline in higher-rated corporate business. Additionally, changing distribution systems have made a wider variety of rates more easily available, so the consumer has greater choice. No longer can the hotel assume that if the guest is paying a leisure rate they are on a leisure break, as now a number of corporate businesses use the differing distribution channels to avail themselves of leisure rates via the Internet." 

Performance of the UK Hotel Industry 2002
 

The HotelBenchmark Survey contains the largest independent source of hotel performance data outside of North America and tracks the performance of over 6,000 hotels. The HotelBenchmark Survey � UK collects occupancy and average room rate data from over 1,350 hotels representing nearly 140,000 rooms every month, making it largest independently run survey on UK hotel performance. For further information or details on how to join the survey please visit us www.HotelBenchmark.com or contact Lorna Clarke on +44 207 438 2870.

Deloitte & Touche is the UK�s fastest growing major professional services firm. It is based in 23 locations, has over 10,000 staff nationwide and fee income of £713.6 million in 2001/2002. Deloitte & Touche is the UK practice of Deloitte Touche Tohmatsu, a global leader in professional services with over 98,000 people in 140 countries and fee income of $12.5 billion for the year ended 31 May 2002.

The dedicated Travel, Tourism, and Leisure practice serves owners, investors, operators and developers throughout Spain, the Middle East, India and Africa. 

Authorised by the Financial Services Authority in respect of regulated activities. The information contained in this article is correct at the time of going to press. For further information on Deloitte & Touche, you can access our website on www.deloitte.co.uk.