PwC forecasts highest hotel occupancy since the 70s in London

Fresh analysis by financial consultancy PriceWaterhouseCoopers (PwC) predicts record hotel occupancy for London and the regions for 2012.

The London 2012 Games are set to deliver a RevPAR rate of 2.8 per cent, according to PwC’s latest survey.

PwC believes hotels should see a positive impact on occupancy of almost 1.2 percent in London and 0.9 per cent in the regions, taking occupancy to almost 84 per cent in London and 72 per cent outside the capital.

If the figures predicted by PwC are achieved it would be the highest annual occupancy seen in London since the 1970s and the highest ever in the regions.

Robert Milburn, hospitality and leisure leader at PwC, says: “All eyes will be on London this summer as the Queen’s Diamond Jubilee and the London 2012 Games attract the world’s interest.

“Without the boost to Q3 from the Games, London hotels would have been looking at a poor year with the impact of the harder trading environment being felt more keenly.”

One cloud on the horizon flagged up by PwC is a possible post-Olympic dip and supply spike meaning weaker trading for London.

PwC expects an annual daily rate (ADR) gain of 1.2 per cent in the capital, taking rates to over £135 for 2012.

Liz Hall, Head of Hospitality and Leisure Research at PwC, said she expected occupancy to hit almost 92 per cent in London in Quarter 3, with rates at £156 pushing RevPAR to almost £144.
“Many operators expect trading to remain flat in London at best outside Q3 and we continue to forecast slight RevPAR declines in Q2 and Q4,” said Hall.

For the regions, PwC expects only a small demand boost from the Games. Weymouth, the football cities and other centres holding events should see a small occupancy uplift and some areas will be hoping to benefit from the staycation trends as well as the Diamond Jubilee and Farnborough International Airshow. There could also be some overspill from London.

“Unlike London though, we do not see the small occupancy boost keeping rates or RevPAR out of negative territory,” said Hall. “We anticipate ADR could fall by -2.1 per cent during 2012 as a whole and RevPAR to fall by -1.2 per cent.”

Looking ahead to 2013, and PwC sees lower demand and the east London supply spike look likely to depress trading in London.

“With no quick relief for squeezed consumer spending, a supply overhang and some difficult comparables in Q3, we anticipate a three per cent occupancy fall to an average 81 per cent in 2013,” said Hall.
 
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Paul Colston

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Paul Colston

Managing Editor, Conference News & Conference & Meetings World.

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