London hotels facing sharp revenue decline

Hotel News - 12/01/2009

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The GDP is expected to decline by 1.8 per cent this year, and the PricewaterhouseCoopers (PwC) hospitality & leisure team is anticipating that average hotel room rates in the UK will drop by 10 per cent. Rates at London hotels are expected to be the hardest hit, falling by 23 per cent, driven by falling room rates.

Provincial hotels are expected to see a more modest 3.4 per cent drop in revenue, according to PwC.

Reduced business travel to London and cuts in travel spending are cited as the reasons for the decline in the capital being more severe, although in the short-term, losses may be softened by an increase in tourists from the eurozone.

The head of research for hospitality and leisure at PwC, Liz Hall, said:

"Falling consumer spend and investment, combined with the prolonged financial market crisis will restrict economic growth over the next 12 months. We now expect GDP to contract by two per cent in 2009, following an estimated 0.9 per cent growth last year.”

Hall went on to say: “This harsher environment means hospitality and travel budgets are under even more pressure as firms tighten up on cost control. Although visibility is restricted, evidence points to an unprecedentedly poor hotel outlook for the year.”

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