Hotels lower rates as failures threaten

Hotel News - 16/03/2009

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Industry analysts are predicting that a number of hotel chains in Britain are at risk of failure this year.

Law firm DLA Piper polled 143 hotel executives and learned that 95 per cent were predicting bankruptcies in the industry in the UK in 2009; and 25 per cent expect that 10 or more hotel chains will end up in administration.

Recent reports have shown a significant decline in business travel as well as in overall demand for hotel rooms. The results of this survey add to the growing concern regarding the fate of many industry operators.

PricewaterhouseCoopers (PwC) forecast a decline of 19 per cent in UK hotel revenue for 2009, with London properties being the hardest hit. Nightly rates in London have dropped, on average, to £100.31, which is the lowest since 2005. Hotel occupancy for the final quarter of 2008 dropped by more than 13 per cent, to 69 per cent, which was a 17-year low.

"In the last quarter of 2008, corporate Britain sat up and realised just how bad things were going to get," Robert Milburn of PwC noted. "Given that hotels normally lag behind the cycle by two quarters, we are likely to be on the cusp of the worst few months of the year."

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