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PwC notes ‘dawning reality’ of inflated London hotelier expectations

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LIZ HALL London hotel trading for the six months to June was mixed, with an average daily rate gain of 1.8 per cent (to £154) compared to the same period last year. The new figure is part of STR Data benchmarking data analysed by business consultancy and tax advisers PwC

However, decelerating growth drove an occupancy slip of 1.2 per cent, giving only a marginal RevPAR gain for the six months. This is in stark contrast to the 12.7 per cent RevPAR gain at the halfway point last year.

The data shows a particularly disappointing month for London albeit against record comparables in 2011. The month saw occupancy levels fall by 8.4 per cent to 82 per cent, against an average of 90 per cent in June 2011.

Commenting on the London hotel performance, Liz Hall (pictured), Head of Hospitality and Leisure Research at PwC, said: “Weekly trends data for July have shown continuing declines in key metrics although there are signs of a welcome uptick in the last week of the month.

“There are a number of possible reasons for the recent drop in hotel performance: the deteriorating economic situation, extensive new supply in the capital, the Jubilee holiday which saw corporate travel disrupted by the two Bank Holidays, a pre-London Games dip, and difficult occupancy comparables have all taken their toll. The earlier start to Ramadan compared to 2011 may also be a factor.”

Hall did say there could be some pent up demand post-Games as the many business travellers and visitors who had avoided the city return.

“PwC has consistently warned against the inflated expectations of some hoteliers for a London Games bonanza, but the dawning reality after this first week’s events is that London has been much quieter than even we expected,” she added.

Looking beyond 2012 Hall believed there would be a powerful tourism legacy from the London Games, with high quality visitor accommodation.

“The challenge for London’s hoteliers after the Games will be how to differentiate themselves in such a competitive market off the back of the feel good factor,” said Hall.

“In the short term, supply issues could impact trading and the East of London particularly could experience a difficult period,” she added.
 
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6 Aug 12

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