Knight Frank advises cautious optimism for 2011/12 following the results of its Hotel Operator Sentiment Survey 2011. London is the top performing hotel market in Europe having benefited from a weak pound and a relatively restricted supply of hotel bedrooms which has made the operational environment for existing hotels more favourable. There is a good supply of high end bed stock available in the pipeline with the focus being on the West End and City. Trinity Square looks set to become the "dormitory quarter" of the square mile with several recent new openings and further hotels planned.
In the regions, traditional tourist destinations such as Oxford, Cambridge, Bath, York and Edinburgh have all performed relatively well, due to their exposure to both commercial and leisure markets, but outside of the mixed segment sectors the market has struggled.
Highlights from the operator survey:
- Led by London, continued growth is anticipated for average daily rates (ADR) in 2011/12 following a marginal decline in recent years
- There is an expectation of an improvement in revenue per available room (RevPAR) in the year ahead due to improving ADR and average room occupancy (ARO)
- The South had the strongest performance overall whilst in the North, Yorkshire and Humber presented the most positive response going forward
- When it comes to perceived risks to business performance there is a very clear pattern among the responses. The prevailing economic environment presents the biggest concern to hotel operators at the current time. Non-wage cost inflation is the single biggest concern, followed by weak economic growth
- Rising energy costs are a particular concern for operators and as a consequence there has been a strong take-up of green technologies, with solar panels being the most popular initiative, with 30% of panellists having active schemes planned
- The overall view provided of our panel was relatively upbeat and positive and they believe that the sector is performing as well as could be expected.
Source: Knight Frank