UK Hotel Room Rates to Fall to 2005 Prices

New data showing the scale of the battle facing UK hotels, where average room rates will fall back to 2005 levels over the next 12 months, and the industry will not move into recovery mode until late next year.

A new reports from PricewaterhouseCoopers forecasts that the average room rate (ARR) will fall by 8.1 percent to $127 a night in 2009, down from $138 last year— the biggest drop since 2002, when rates fell by almost 6 percent.

Robert Milburn, PwC’s UK hospitality and leisure leader, said that overseas visits are down 9 percent and air travel is expected to contract further. “We last saw a room rate fall of this magnitude (8.1 percent in 2009) in 2002 when rates fell almost 6 percent,” he said.

PwC predicts that revPAR (revenue per available room) will fall by 12.1 percent this year and slow to a 2.4 percent drop in 2010.

However, according to a survey by an accommodation booking website, Britain’s leading holiday destinations saw visitor numbers rise by up to four times in August compared with the same month last year. According to the company, the popularity of domestic breaks has been aided by the weak pound, which has discouraged overseas travel, and the acknowledged reduction in the price of hotel rooms across the country.

On a worldwide scale the picture is similar with the average price of a hotel room falling by 17 percent in the first six months of 2009, according to the latest Hotel Price Index from