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News Article

Capital tourism drive set for London


"Totally London", a month of the UK’s capital presenting the best it has to offer, is set to begin on 17th May, running to 15th June. Ken Livingstone, Mayor of London, made his announcement to boost the city’s economy with theatres, restaurants, visitor attractions, hotels and shops mounting special promotions and competitions.

"Totally London", a month of the UK’s capital presenting the best it has to offer, is set to begin on 17th May, running to 15th June. Ken Livingstone, Mayor of London, made his announcement to boost the city’s economy with theatres, restaurants, visitor attractions, hotels and shops mounting special promotions and competitions.

Following the slump after 11 September and the conflict in Iraq, tourist industries are in need of the support. Preliminary March data from the HotelBenchmark Survey by Deloitte & Touche indicates that the capital experienced its first month of double-digit revPAR (revenue per available room) decline since June 2002 with revPAR falling 11.8 per cent to reach GB£64. This comes on the back of two months of consecutive revPAR falls in January and February when revPAR fell 0.6 per cent and 6.8 per cent, respectively. This fall is all the more worrying given that the comparable data for first quarter of 2002 was weak.

Mr Livingstone sees the promotion of London as a "unique opportunity for a good time and good business to go together. London’s incredible range of attractions are always there. For a month they will available with a packaging, in some cases a value, that is unique for Londoners and visitors to enjoy."

The HotelBenchmark Survey reveals that in March, London’s occupancy fell to 69.8 per cent, a decline of 8.6 per cent over the previous year. A contributing factor to this decline was undoubtedly the onset of the war in Iraq, which started on 19th March and caused some people to postpone or cancel their travel plans. This is the first time since the HotelBenchmark Survey was launched in 1996, that occupancy levels in London have fallen below 70 per cent during March, and this contrasts with the average for the last eight years when London hoteliers have typically managed to record occupancy levels for the month of around 79 per cent. However, the timing of Easter was different this year, with Easter 2003 falling in April, compared with March in 2002. That said however, March occupancy levels are still 9 per cent lower than the 76.7 per cent reported in March 2001, when Easter also fell in March.

Hotels with an average room rate between £160 and £200 were the capital’s worst performers in March 2003 reporting occupancy declines of 21.7 per cent to reach only 54.3 per cent. Encouragingly however, the decline in average room rate was limited to 1.7 per cent, resulting in revPAR tumbling 23 per cent. Hotels with an average room rate of over £200 and boutique hotels were also hit hard by the fall in demand, with occupancy levels falling around 13 per cent, although all categories of hotels did experience occupancy declines.

Occupancy levels for the first quarter of 2003 in London are also at their lowest levels ever recorded on the survey at 69.1 per cent, which has resulted in a first quarter revPAR decline of 5.5 per cent. This fall in performance is caused by virtually equal declines in both occupancy and average room rate. During the first quarter, the average occupancy decline across all London hotels was 2.5 per cent, whilst average room rates fell 3 per cent to reach £92. The only category of hotel to report an improvement in performance over 2002 levels during this time has been hotels with an average room rate of under £80 and over 400 rooms. Encouragingly, this segment has managed to increase occupancy by 1.9 per cent during the first quarter to reach 75.1 per cent. This increase in demand combined with a marginal increase in average room rates has helped this segment advance revPAR by 2.1 per cent at a time when all the other segments are experiencing revPAR erosion.

Not unsurprisingly, given the overall slowdown in global travel, the hotel markets at London's two main airports - Heathrow and Gatwick - came under pressure in March with occupancy levels falling 6.4 per cent and 6.8 per cent, respectively. These occupancy declines are set against a backdrop of decreasing passenger arrivals as recorded by BAA, of 8.1 per cent for Heathrow and 6.2 per cent at Gatwick for the month. Although March is the first month this year that Heathrow hotels have reported a decline in occupancy, the Gatwick market has been under pressure all year, in part due to increased capacity in the marketplace following the 219-room extension to the Hilton which came on stream in January.

Despite the downturns in London, hotels in regional UK have remained relatively unaffected, partly due to the fact that much of their business is domestic in origin. There, revPAR decline has been limited to just 0.3 per cent. Occupancy levels fell 1.2 per cent to reach 64.2 per cent for the month but this was offset by a 0.9 per cent improvement in average room rate to record £60 for the month. Year-to-date regional UK revPAR is down 1.3 per cent to £38, but hoteliers have still managed to grow the average room rate, albeit marginally, which was up 0.4 per cent over the same period in 2002.

Commenting on the results, Julia Felton, director of travel, tourism and leisure at Deloitte & Touche said, "The first quarter results for the London hotel market are clearly very disappointing, particularly as the 2002 comparables are weak. Ken Livingstone’s "Totally London" month will be welcome news to the capitals hoteliers who having still not recovered from the shift in travel patterns following the September 11 atrocities combined with poor economic conditions are now confronted with the conflict in Iraq and subsequent travel fears that may ensue, particularly given the leading role that the UK has taken in the conflict. Given that Easter will influence the April results it is difficult to assess future trading conditions but anecdotal data would suggest that there will not be significant improvements in the short-term, and trading conditions will remain tough."

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.

Article details

  • Date
  • 29 April 2003
  • Subject(s)
  • Arts and Entertainment
  • General Leisure and Recreation
  • Hospitality Sector
  • Tourism