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Business News

No upturn for UK hotels this year and room rates set to stagnate until 2013

UK hoteliers will not see trading conditions improve this year and forecast it will be 2013 before room rates in Europe return to levels seen before the financial crisis.

Just 2 per cent of 155 UK hotel executives surveyed forecast a "sustained upturn this year", sharply down on the 37 per cent who last year forecast that 2010 would bring "solid growth", found the DLA Piper 2010 Europe Hospitality Outlook Report.

More than half – 52 per cent – of UK hoteliers fear that room rates will not return to pre-crisis levels until after 2012. But executives at large hotel chains are more bullish and 70 per cent expect to grow their market share in 2010, as they continue to focus on rebranding and converting their small chains to bigger brands.

Karen Friebe, the global co-chair of DLA Piper's hospitality and leisure practice, said that low room rates were a "significant problem" – with rates down by up to 30 per cent over the last year. This was the main reason for the gloom among the 417 European hotel executives surveyed.

Ms Friebe said: "But, while there are signs that occupancy levels have stabilised, there is growing concern throughout the industry that room rates will remain low for years to come and conversions are unlikely to compensate for reduced new build activity." She added: "People are just not travelling for business purposes."

But she identified a few glimmers of hope, including a rise in new build activity and the growth opportunities in Brazil, Russia, India and China.