24 October 2008

London hotels hit by Ã¢â¬ËœunprecedentedÃ¢â¬â¢ crisis

The shock collapse of Lehman Brothers and subsequent crisis in the banking sector has hit hotels in the City of London and Docklands.

Average occupancy fell by more than four per cent in September, new figures show.

A sample of 108 hotels in the capital showed profits drop by almost 11% to a daily figure of Ã&#pound;66.66 per room.

Average occupancy was down to 82.7% from 86.8% in the same month last year.

Ã¢â¬ÅâœThe loss of rack and high-paying corporate bookings contributed to a 1.9% drop in daily achieved average room rate to Ã&#pound;118.20. Revenue per room fell by 6.6% to Ã&#pound;97.74,Ã¢â¬~ according to the TRI Hospitality Consulting study.

Managing director Jeremy Langston said: Ã¢â¬ÅâœSeptemberÃ¢â¬â¢s events were unprecedented and had a direct impact on some hotels in LondonÃ¢â¬â¢s financial district.

Ã¢â¬ÅâœWith mounting evidence that the credit crisis is now feeding into all aspects of the global economy, competition for business is likely to intensify for all London hotels.Ã¢â¬~

September was also the fifth consecutive month of negative growth for occupancy and profit at hotels outside London.

Average occupancy dropped by 2.2 percentage points to 76.6% and daily income before fixed charges was down by more than ten per cent to Ã&#pound;41.01 per available room, the report showed.

Langston added: "Companies are bracing themselves for tough times. Many have already revised down this year's travel and accommodation budgets causing an immediate impact on hotel bookings.

"Many are requesting a price freeze in 2009 which will make rate growth an increasing challenge next year."

by Phil Davies