PwC's UK hotels forecast | Bumper crop for London but leaner pickings in provinces
In March when we published our last forecast I expected that the economic outlook would have shown signs of brightening by now, but if anything the omens today look worse and the risks to UK GDP growth are firmly to the downside. Notwithstanding this, our forecasts for 2011 and 2012 hotel performance are substantially unchanged from March and, with nearly nine months under the belt, 2011's forecast outturn looks pretty much assured, particularly for London.
London's performance in Q1 2011 fell someway short of expectation (partly weatherrelated) but a bumper Q2 and a good Q3 have put it back on track for full year RevPAR growth of just over 8%, mainly driven by rate increases. In the provinces though things remain much tougher and while occupancies have nudged forward slightly year on year, rates have remained stubbornly flat as hoteliers have failed to recover pricing power post the technical recession. This problem with provincial rates is now getting very serious, with ADR languishing well below the levels attained in 2005 to 2008.
For 2012 everything is riding on the Olympics, but outside Q3 (which also benefits from Farnborough) we continue to expect an unremarkable year with the risk of falling RevPAR in Q2 and Q4 in London as the capital feels the impact of the new supply coming n to the market. The provinces should make some progress but getting rates up will remain a challenge for most.
Finally, in response to demand from our readers, we will publish next month a forecast for 2012 hotel performance for 17 key European capital and gateway cities. I hope you will find this a useful addition to our established UK and US forecasts and welcome your feedback in due course.
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