Hoteliers in London feel the benefit of EU surge

Britain's closer economic ties with Europe are fuelling a boom in London's top hotels, which are experiencing the highest rates of room occupancy for four years.

Although American business and tourist travellers are still shunning Europe - with election year replacing terrorism fears as the principal reason - they are being replaced by customers from France, Italy and Germany who are using London's hotels for meetings and conferences. And Britain now has the strongest hotel economy in Europe.

The survey, by the Deloitte consultancy shows room occupancy levels reached 83 per cent in September, compared with 77 per cent for the year to date overall, itself higher than the 70 per cent figure recorded in the same period last year.

The survey also showed an increase by £9 to £73 in revenue per available room - which is the number of rooms measured against total revenue - for the first nine months of this year. That is a 14 per cent rise on the same period last year.

The strongest growth was among upmarket hotels catering for top business travellers and corporate events, such as London's Inter-Continental on Hyde Park or the Marriott at the former County Hall on the South Bank, where rooms can cost between £160 and £200 a night.

The £200 a night-plus sector did almost as well. That includes some of the new "boutique" hotels as well as those favoured by celebrities, such as the Lanesborough and the Metropolitan, where the occupancy has risen by 11 per cent and the revenue per available room rose by 15 per cent.

But budget hotels, classified as those where rooms are £50 or less, also fared well, seeing an increase in revenue per room of around 6.6 per cent over the same period. However, those have been least affected by the slump of the past few years. Outside London, airport hotels are also on a roll, with occupancy rates up 7 per cent, particularly those around Heathrow, which has seen record passenger numbers.

Across Europe, the United Kingdom is the strongest performing region, with revenues up 9 per cent on the same period last year, double the European average.

Analysts say the boom is expected to continue for the rest of the year and may even grow further next year when Americans travel more. The figures are the best since September 2000. Since then, the fears of terrorism after 11 September, 2001 and the Iraq conflict have reduced travel to Europe from the United States. Levels have remained low this year because traditionally, in election year, the US economy remains flat and its citizens are less likely to travel.

Business from Japan, the other country which normally subsidises the top hotels, is also slack because of the uncertain Japanese economy.

Marvin Rust, hotels analyst at Deloitte, said: "Airport figures show the travellers we are getting are from the big European economies and these are the people staying at the big hotels. This is obviously due to our increasing ties with Europe."