Market Reports

Has The UK Hotel Sector Reached A Turning Point As Hotels Report An Improvement Over Second Half Of 2003 - But Pace Of Recovery Is Slow

New statistics for the UK hotel sector issued today by PricewaterhouseCoopers hospitality and leisure group forecast that the UK will see a third year of declines in revenue per available room (RevPAR) in 2003, with a 3.5 % decline in UK RevPAR.

PricewaterhouseCoopers UK Hospitality Directions Europe, Forecast Alert, December 2003 also shows that London continues to bear the brunt of the downturn in international travel and that a RevPAR decline of 6.8 % is forecast this year.

Robert Milburn, leader, PricewaterhouseCoopers Hospitality and Leisure Group commented:

“Based on these statistics, 2004 looks like being another uphill struggle for hoteliers but the outlook for 2005 is more positive. This might tempt investors, in particular those with deep private equity-lined pockets, to take another look at acquisition opportunities in the sector."

Forecast Alert concludes that the outlook for the hotel sector in 2004 is for slightly improving market conditions based on a pick up in global and UK economic growth, strengthening international and corporate travel demand (including the release of some pent up demand) and a further pickup in the conference sector.

Other key findings include:

• UK RevPAR growth of 2.7 % is forecast for 2004 (which is more modest than envisaged in our previous forecast.

• London is expected to lead the recovery in the European hotel sector but PricewaterhouseCoopers anticipate a ‘long haul’ back, with RevPAR growth in London of just 0.9 % in 2004 and then 4.8 % by 2005.

• For the Provinces 2.9 % RevPAR forecast in 2004 and 4.9 % RevPAR gain in 2005 at which point the Provinces virtually mirrors the expected gains in London in 2005.

Liz Hall, research manager, PricewaterhouseCooper added:

“The UK hotel sector is experiencing a difficult but improving trading environment. At the time of our last forecast in August 2003, there were indications that the UK might achieve marginal recovery in RevPAR in 2003. However, despite recovery reported in a few demand sub-sectors, such as provincial conferences, the pace of recovery for UK hotels has been slow. UK economic growth has so far been sluggish. International and corporate travel has shown few consistent indicators of a revival in traveller volumes.”




1. Revenue per available room (RevPAR) - is a key performance metric used in the hotel industry which reflects demand. It is calculated by multiplying a hotel's average daily room rate (ADR) by its occupancy rate.

2. Hospitality Directions Forecast alert– Europe Edition – December 2003 is available electronically by subscription only (£190 per annum - includes biannual publication plus two updates). Copies for the media are available from Semi Da-Cocodia, PricewaterhouseCoopers on +44 (0) 207 804 2189 or semi.a.da-cocodia@uk.pwc.com. Please direct all other queries to Victoria Heaver on +44 (0) 0207 212 3467 or Victoria.heaver@uk.pwc.com.

3. The report also charts the following hotel statistics for the UK, London and the Provinces:




4. Launched in January 2000, PricewaterhouseCoopers Hospitality Directions - Europe Edition is a biannual research journal, with quarterly forecast updates, offering original research on the European lodging industry. The journal draws on PricewaterhouseCoopers extensive lodging data collection, empirical studies and solid econometric models to support all positions and conclusions.

5. PricewaterhouseCoopers (www.pwc.com/uk) provides industry-focused assurance, tax and advisory services for public and private clients. More than 120,000 people in 139 countries connect their thinking, experience and solutions to build public trust and enhance value for clients and their stakeholders.

Unless otherwise indicated, PricewaterhouseCoopers refers to PricewaterhouseCoopers LLP a limited liability partnership incorporated in England. PricewaterhouseCoopers LLP is a member firm of PricewaterhouseCoopers International Limited.



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