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Business deflation helps hike hotel figures

Jerome Smail 25 March 2015
Business deflation helps hike hotel figures

As UK business costs entered deflation for the first time since 2009, hotels were among a number of businesses that have benefited from increased consumer confidence in February, according to preliminary figures released by business advisory and accountancy firm, BDO LLP.

Falling business costs and increased wage growth for consumers allowed for a more care-free financial outlook, with romantic Valentine’s Day getaways and Six Nations fans helping to boost bookings and profit to record a stronger February than in 2014. The previous month’s figures – January 2015 – were the strongest since 2010.

Compared with February last year, regional hotels saw an 8.4% rise in average room rate to £57.43, while occupancy increased by 2.7% to 71.8%. Rooms yield was also up an impressive 11.4% to £41.22.

Similarly, hotels in London saw growth in rooms yield – up 2.9% to £86.68. This was the result of a high average room rate (£110.37 – up 2.7%) on the back of strong demand. Figures are also likely to be elevated from the Global Law Summit 2015 which took place in the capital in late February.

Robert Barnard, partner at BDO, said: “Despite being the shortest calendar month, healthy domestic tourism together with cost deflation have propelled February hotel figures to give the sector an incredibly strong start to the year.

“The UK’s continued investment in key sporting events in particular, despite the economic downturn, has proved a winning formula for tourism and subsequently the hotel industry, which we saw once again with the Six Nations Championship.

“As we emerge strong from the recession and consumers have more cash in their pockets, we expect even further domestic tourism, as well as increased overseas travellers numbers, will help the industry continue to thrive.”