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London skyline from Tower Bridge

(LONDON, UK) -- London hoteliers are filling up their properties at the expense of falling room rates, according to a new Deloitte industry review.

Hotels in the UK saw revenue per available room (revPAR) fall 10.9% to £60 ($98 US) , during the first three quarters of 2009. Average room rates fell 7.2% to £85 ($139 US)  while occupancy dropped 4.0% to 70.5%.

(1 British pound on Oct. 19, 2009 = 1.63200 U.S. dollars)

Hoteliers in London saw revPAR fall 7.4% to £98, as £10 were knocked off average room rates compared to last year. Occupancy saw a marginal decline of 0.2% reaching 80.4%.

Marvin Rust

Marvin Rust, Hospitality Managing Partner at Deloitte, applauds the London results. He says: "To achieve over 80% occupancy during one of the most severe economic downturns in history is very impressive, and the capital is proving to be one of the most resilient cities across the globe.

"Leisure demand on the weekends has been particularly strong in London resulting in hotels achieving stronger results during several weekends this year compared to last."

Rust adds: "The number of overseas visitors to the UK were down 8% during the first seven months of the year, according to the Office for National Statistics.

Birmingham, UK

"However, a surge in domestic tourism is counter-balancing this decline. So far this year, overseas departures by UK residents have decreased 16% as the appeal to holiday in the UK heightens. This has helped hotels to avoid the massive average room rate discounting that has taken place in other European countries."

Meanwhile, hotels across the regions saw more significant declines in revPAR as it fell 13.1%. Average room rates were the main culprit behind the decline, down 7.9% to £67, while occupancy fell 5.7% to 66.4%.

The Deloitte study says Glasgow is still experiencing the least severe revPAR drop across the UK, down only 1.4%, as it continues to attract more events such as the MOBO awards which it held at the end of September. Edinburgh, Cardiff and Newcastle are also holding up well experiencing single digit revPAR decline year-on-year.

Glasgow skyline

Hotels at Gatwick and Heathrow continue to experience some of the steepest declines across the UK, with revPAR falling 22% in each market. Less passenger traffic is suppressing demand for hotel nights and according to BAA, passenger traffic at Gatwick fell 8.9% year-to-August as a result of the open skies agreement.

However, during  August, Gatwick grew its domestic and European traffic and this if sustained should have a positive knock on affect on hotel demand in due course. Heathrow's passenger traffic dropped 2.6% year-to-August, but hotel performance has also waned due to the new room supply that entered into the market with the opening of Terminal 5 last year.

Meanwhile, hotels in Reading are suffering the worst decline in revPAR down 24.9% to £41, with occupancy decreasing 16.7% to a humble 55.6% while average room rates dipped 9.9% to £74.




Deloitte LLP is the United Kingdom member firm of Deloitte Touche Tohmatsu ('DTT'), a Swiss Verein, whose member firms are legally separate and independent entities.

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