Challenging market conditions will continue to make life hard for provincial hotels in 2011, leaving sales growth flat and profits down, according to TRI Hospitality Consulting’s latest forecast.

In 2011, TRI anticipates zero growth in occupancy performance, and a marginal growth of one per cent in average room rates, resulting in a 0.9 per cent growth in Room Revenue per Available Room (RevPAR). However, TRI Hospitality Consulting’s managing director, Jonathan Langston said that while there will be a decrease in the leisure market sector room rates in the UK, the volume and value of commercial room night demand is increasing compared to 2010.

He said: “Typically commercial demand is more lucrative for provincial hotels when compared to leisure market performance, and overall, the increase in commercial demand should at least off-set a forecasted dip in leisure room night and sector rate performance.”

For London, the picture is slightly brighter – TRI forecasts a 3.4 per cent increase in room rate to the leisure and commercial markets, while occupancy will remain stable. Subdued revenue growth and rising costs mean that TRI is expecting Gross Operating Profit per Available Room (GOPPAR) growth of just 1.1 per cent in the capital.

Langston said: “It should also be noted that gross operating profit performance (in London) is fast approaching peak pre-recession levels achieved in mid-2008, just before the credit crunch and subsequent recession - a strong recovery in under a four-year period.”