London Hotel Prices Fall

It has been interesting to monitor Hotel Price Indexes (HPI) over the last few months. Having spoken to a number of GM’s worldwide; during this economic downturn they have been reluctant to lower prices and have instead added value to their stay packages in order to keep their RevPAR high and limit the panic caused to hotel owners, lending institutions, and management companies.

In fact, it was only two months a go that I gave three cheers to the hotel industry for seeing the bigger picture and continuing training throughout this recession. It seemed that hotel GMs had donned their armor plating, had their heads down, and were prepared to battle on into the unknown.

I’m currently based in China, and the financial crisis is yet to hit in such a dramatic way as in the east. Hotel occupancy within 5* hotels based in manufacturing and engineering cities has dropped due to redundancies in the west and the removal of foreign experts on international assignment; however there is no immediate need for pessimism.

Yet, I was not surprised to read on Travel Daily News International that hoteliers across the UK - and especially in London - are continuing to drop hotel room rates. Hotel.com’s HPI shows that London hotel prices were down by 12% to £111 per room on average in the last three months of last year.

The article by Theodore Koumelis continued to say that “Hotels.com saw a 49% increase in the number of searches by Eurozone travellers for London hotels in December 2008 compared to a year earlier, as travellers sought to take advantage of the struggling pound.”

A quick search of hospitality related websites, and the travel section of British newspapers, reveals that the British press has at last turned PRO-BRITAIN in terms of it being a holiday destination. For years it has been difficult to find any positive press, yet now every British city is the new ‘Place to Be Seen This Summer’. But is this tactic working? Web searches from abroad have increased because of the weakness of the pound, but that isn’t going to aid the Brits themselves in any way.

Travel Daily News International says, “UK hotel prices were down by an average of 12% at the end of 2008, with hotels in the north-west seeing some of the biggest price drops. Prices in Blackpool fell by 22% to an average of £79 per room per night, and in Manchester by 19% to £73.”

So you tell me, is the title of Theodore Koumelis’s article, “Boost for Tourism as London Hotel Prices Fall”, an accurate one? Will the UK HPI continue to fall during this economic turmoil, or will the price increase indeed be a boost for tourism?

Click here to read the full article.

Bye for now

Emma

I am still on a search for the best hotel booking system for small to medium sized hotels. If you know of hotel booking software that can beat www.hotelsystems.co.uk for ease of use and functionality then please contact me on eharradine@hotmail.co.uk

Hotel Industry Insolvencies

I’d like to start on a personal note by highlighting the very sad death, last week, of one of my heroes; John Martyn, the British singer, song writer, music legend, and guitarist extraordinaire. His jazz, folk, funk, and blues fusion was always original and utterly captivating. He’ll be sadly missed by his many devoted fans, and certainly by me. Rest In Peace, John, Rest In Peace.

And to continue the depressing tone of today’s blog, I feel the need to talk about recent insolvencies within the hotel industry. As the ‘credit crunch’, ‘economic tsunami’, ‘global recession’, or whatever you choose to call it, has over taken our personal lives, businesses, conversations, nightmares, television screens and newspapers, I have been reluctant to add to the ever-increasing depression surrounding our lives.

The number of small-to-medium sized hotels, motels, and guesthouses to go bankrupt in the UK over the last ten years has been reasonably high in comparison to other industries and businesses. However, large hotels and hotel chains have always remained stable with insolvencies peaking at forty-four in 2007. Whilst travel agent insolvencies had risen by 95% over two years in 2007, the percentage of bankruptcies within hotel chains had risen just a few percent per year until 2007.

However, I was not surprised to read in The Times Online today that Insolvencies in the hotel sector doubled over the winter and that “36 hotel businesses failed in the final three months of 2008, the highest quarterly figure since the early 1990s”. The Times revealed that, “the increase took the total number of insolvencies over 2008 to 87, almost double the total of a year earlier”.

For more information on the facts and figures please visit the Times Online article by Dominic Walsh at:
http://business.timesonline.co.uk/tol/business/industry_sectors/leisure/article5634691.ece

At this early stage it is impossible to foresee how long this downturn will last and how large an effect it will have on the hospitality industry, but judging by the delayed effect the crisis has had on the hotel industry, I wonder whether the effects will be seen long after the economy improves.

We just have to hope that the hotels with service and a product to be proud of come out the other end fighting fit and with fewer competitors; hopefully those hotels that should never have been in the industry in the first place.

Goodbye for now,

Emma

I am still on a search for the best hotel booking system for small to medium sized hotels. If you know of hotel booking software that can beat www.hotelsystems.co.uk for ease of use and functionality then please contact me on eharradine@hotmail.co.uk