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Counting the Cost of the UK Riots

Written on September 1, 2011

August saw some of the worst rioting seen in the UK in decades when looters took to the streets in major cities across the country. As we reported at the time, many hotels were affected raising serious security concerns.
However, the time has now come to count the business cost of the UK riots for hoteliers.

UK Riots Dent London Business

Data from PKF Hotel Consultancy Services reveals a 3.2% year-on-year decrease in London’s occupancy figures during August. This decrease dented the strong growth recorded in London in recent months – a trend that was forecast to continue as the industry entered its peak season.
The riots appear to have had a negative impact on London hotels as visitors decided to stay away or shorten their breaks in the capital.

“Although occupancy remained above the important 80% benchmark, the decline in guest numbers bucks the trend seen earlier in the year,” explained PKF partner, Robert Barnard. “Only skilful revenue management enabled hoteliers to avoid a drop in yields during their peak season.”

A 9.5% rise in room rate meant that room yield still increased by 5.9% to £101.66 from £96.02 in August 2010.

PKF remains optimistic that the challenges have been short term in nature and that the industry will quickly recover.

Regional Performance

Hoteliers in the regions enjoyed one of their strongest months this year, with a 2.4% increase in occupancy and a 2.5% rise in room rate resulting in rooms yield growth of 4.9% from £49.41 to £51.82. Of the major cities, Manchester and Edinburgh performed particularly well, posting year-on-year rooms yield rises of 8.8% and 10.5% respectively.

“August is an enormously important month for the hospitality sector, so it is encouraging to note that hotels in the rest of the country posted some of their best results to date last month,” continued Barnard. “The data suggest that, despite the dismal weather, families decided to spend the summer season in the UK as they continue to grapple with an uncertain economic outlook and unfavourable exchange rates.”

“The popularity of the ‘staycation’ has endured for another year and, given the lack of any meaningful economic recovery, it is hard to see anything but a continuation of this trend in summer 2012.”