London hotels avoid traditional post-Olympic slump

London hotels have avoided the traditional post-Olympic slump, having seen a rise in both occupancy levels and revenues in September.

Across the rest of the country, occupancy levels also rose in September, largely due to an increase in leisure-based demand, although a 3.1% drop in average room rate meant there was no growth in revenue.

Latest figures from HotStats show that in London occupancy levels increased 3.1 percentage points in September to 89.4%. The average room rate fell 3.2% to £137.26, but total revenue per available room went up 1.3%, underpinned by a 19% rise in non-room revenue.

"Whilst there were rumours of a potential post-Olympic slump as experienced in previous host cities, London hoteliers have responded with the strongest September occupancy performance recorded since HotStats began capturing data for the London full-service hotel market," said Jonathan Langston, managing director at TRI, the company responsible for collecting the data.

It said the strong performance could, in part, be attributed to London hosting "the most successful Paralympic games in history" drawing record crowds, but there was also a 22% increase in leisure related demand. However, corporate demand was down year on year.

Gross operating profit per available room rose 0.8% to £86.41.

"As always, London continues to exceed expectations," addd Langston. "Despite the initial slump in headline performance figures during June and July,the strong start to the year in addition to the performance in August and September has almost guaranteed that year-on-year performance for London hotels in 2012 will be up on 2011, as profit levels have already increased by 6.6% in the calendar year."

Unfortunately, the outlook for the rest of the country is poor. "We anticipate that profit levels will continue to erode as food prices are set to soar with adverse weather conditions over the summer having blighted UK harvests," said Langston.

"Furthermore, energy suppliers such as Npower and British Gas are set to increase their gas and electricity prices well above the rate of inflationbefore the end of this year by as much as 9%. Coupled with a sustained economic recession which continues to have a negative impact on key hotel demand generators, the prospects for the provincial hotel market are not bright."