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Strong September Recorded For London Hotels

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Strong September Recorded For London Hotels

By - Monday 31 October 2011

Hotels in London performed well during September this year after a slowdown in profitability during August, new research shows. The latest figures to be published by TRI Hospitality Consulting revealed that establishments in the capital saw the average profit per room increase by 10.4 per cent over the course of last month. This puts the year-to-date average firmly above the returns recorded in 2010, the HotStats UK Chain Hotels Market Review revealed.

The revenue per available room (RevPAR) generated by accommodation providers in London rose by 8.8 per cent year-on-year during September, the firm noted. Typical RevPAR levels in the capital now stand at GBP 122.71, with "strong rate increases" said to be the driving force behind the increase, according to TRI Hospitality Consulting. By contrast, Liverpool's hoteliers suffered a 3.5 per cent fall in RevPAR during the same period, with the Labour Party Conference doing little to boost the city's fortunes. The survey also found that profitability per room plummeted by 16.7 per cent last month, on an annual basis.

Yet the story was very different further south in Birmingham, where the Liberal Democrats hosted their party conference in September. Here, the profit per room only increased by a marginal 0.4 per cent, but RevPAR was up by 4.3 per cent in the same timeframe. Although it posted positive figures, Birmingham still lags behind London, as do the rest of the provincial markets. Jonathan Langston, managing director of TRI Hospitality Consulting, attributed the city's strong performance to demand from the commercial sector and its popularity as a place to do business.

A study published by BNP Paribas Real Estate examining the European hotel sector during the first half of 2011 made a similar point. Researchers noted that the UK began to see the number of business travellers arriving on its shores picking up back in 2009, with the result that its RevPAR figures have now stabilised, while other markets on the continent - notably France and Germany - have seen more dramatic increases recently. However, the study singled London out for its high occupancy rates, which averaged 82.5 per cent during the first half of 2011. Overall, the UK's occupancy rate stood at 72 per cent, buoyed by the performance of the capital's hotels.

This is still significantly better than the other European markets surveyed, with France boasting the next-highest figure at 65.6 per cent. The consistent performance and steady recovery among hoteliers in the UK may therefore attract investors to the sector, with those keen to avoid risk likely to opt for properties in the capital rather than elsewhere in the country. The BNP Paribas Real Estate report revealed that the UK took the lion's share of investment volumes during the first half of this year, accounting for 41 per cent of all deals completed.

Overall, close to one billion euros (GBP 871.9 million) has been ploughed into the UK's hotel market, with foreign investors some of the most active. This pattern is expected to be evident during the second half of 2011 as well, with the firm highlighting a transaction worth approximately 800 million euros, which saw NAMA sell three top hotels in London. It would appear that it is not just hotels in the UK that investors are interested in, with Jones Lang LaSalle recording an overall rise in the level of commercial real estate investment taking place in the country during the third quarter of 2011. Earlier this month, the organisation noted that the UK accounted for almost 30 per cent of activity in the sector during the three months from July to September and remains the largest commercial property investment market across Europe.

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