The hospitality industry is predicting a fall in London hotel rates in 2013, due to the supply of rooms outstripping the demand from a weak economy.
Research by PricewaterhouseCoopers (PWC), a UK based consultancy company, suggests that while London hotels are still enjoying a post Olympics boom, the prices are expected to decrease by around 77 percent from the unusual average daily rate of GBP143 per room, reflecting a post-Olympics hangover.
Liz Hall, the head of hospitality and leisure research at PWC, said, ‘The London hotel market has demonstrated remarkable resilience since the start of the recession.
This has been helped by one-off events such as the Jubilee and 2012 Games, which have driven some highs and lows (reduced business travel) this year.
It’s hard to feel confident about 2013, there will be winners but a weak economic and travel environment, a fight for market share and more new rooms to fill mean many will feel the hit.
There has been a flurry of high-end, boutique and branded budget openings across London, often in newer hotel locations. These new products clearly differentiate themselves and offer lower rates to gain market position and lure consumers away from mid-range products.
With at least 2,400 high-end and boutique rooms set to open in London in the next couple of years, the need to differentiate and reinvent the middle ground becomes ever more necessary.’
UK hotels outside London have registered a flat average room rate of GBP58.39 per room in 2012, which is expected to remain the same for 2013.
Robert Milburn, the hospitality and leisure head at PWC, said, ‘More supply, changes to company procurement policies, sustainability issues around travel and communications technology have all left their mark.
However, renewed optimism for a modest revival in conference and event demand and a continued resurgence in business travel should ensure the slow UK hotel recovery continues.’