The summer will see a slump in profits for London hotels, according to estimations made by travel website Hotwire.
Leading analysts have suggested that the boost from last year’s Olympic Games will cause a year-on-year fall this summer when it comes to revenue per available room (RevPAR), room occupancy and hotel prices. The report uses the 2011 Vancouver Winter Olympics as a case study, which saw the average hotel price in the city fall by a mammoth 29 per cent the following year, whilst Beijing 2008 saw RevPAR fall by 43 per cent after the Games.
As new hotels cause prices to fall and competition to increase in the region, hotels in the capital city may suffer a decline this summer, even though government ministers had estimated that an additional 4.5 million people will be visiting the capital city in the next four years. This could also potentially be bad news for the availability of hospitality jobs in the region.
Tara Stangel, director of Hotwire's hotel team, said: “It’s no secret that hotel construction, and therefore quantity of rooms, surged in London leading up to the summer Games. What is still unknown is how many of those rooms will be filled in the years coming. It’s even harder to predict when we take into consideration the weakened European economic climate and declining US tourism rates.”
These drops may force hotels to be more creative in the ways in which they attract more visitors.
This news comes just after a HotStats UK hotel chain survey, which highlighted that profits had been slashed for London hotels by 7.3 per cent in the first three months of 2013, whilst RevPAR also saw a 3.4 per cent decline. Regional hotels across the UK also saw profit falls due to rising expenditure costs.
Berkeley Scott is a specialist recruitment agency providing hospitality employment solutions.