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Watch rates fall as hotels create demand, says report

HVS Hotel Bulletin says a decline in revenues and falling occupancy could send hotel rates tumbling

Pictured: HVS chairman Russell Kett

Hotels across the UK could be tempted to slash rates in a bid to prevent declining revenues, the latest Hotel Bulletin report has forecast.

The report, compiled by hotel consulting organisation HVS, AlixPartners and AM:PM, reveals that hoteliers across the UK suffered the first decline in average RevPar (revenue per available room) in four years during the first three months of the year. Even when a poor start from Aberdeen hoteliers (down 37 per cent year-on-year) is discounted, growth was still sluggish at 1 per cent. Hotels in London were not immune either – as RevPar fell by two points.

Occupancy had also declined in nine of the 12 cities surveyed by the bulletin: Edinburgh, Cardiff and Liverpool registered modest increases. 

“These figures give us a strong indication that the peak of the UK’s hotel occupancy market has been reached and the growth we are seeing now is rate driven rather than occupancy driven,” said HVS chairman Russell Kett.

“There is a risk that some operators will cut rates in an attempt to stimulate demand, forcing competitors to follow suit. Once room rates fall across the hotel sector the likelihood is that values will soften. This is a big concern for London’s hoteliers, particularly with the large number of bedrooms due to open in the next 12 months unless demand starts to pick up again.”

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