2012 is set to be a record year for occupancy in London hotels but the situation after the Olympics will remain difficult, although hotels in the regions may benefit in 2013, writes Peter Ruddick. New analysis from Pricewaterhouse Coopers (PwC) suggests London 2012 will help boost revenue per available room (RevPAR) growth in the capital to 2.8% this year. PwC expects hotel occupancy to rise by 1.2% in London to almost 84%, while in the regions a predicted jump of 0.9% should see occupancy levels at around 72%. If those forecasts prove correct it would be the highest annual occupancy for London hotels since the 1970s and the highest ever for hotels outside the capital. However Robert Milburn, hospitality and leisure leader at PwC, said the figures would be very different and the sector would be suffering without the boost the Games are bringing to London hotels. “All eyes will be on London this summer as the Queen’s Diamond Jubilee and the London 2012 Games attract the world’s interest. And without the boost to Q3 from the Games, London hotels would have been looking at a poor year with the impact of the harder trading environment being felt more keenly,” he said. In London PwC said Q2 and Q4 would see revenue per available room (RevPAR) declines, while many operators expected trading to remain flat at best outside Q3. The positive news that the Olympics is bringing to hotel occupancy in London will not translate into large rises in the average daily room rate (ADR) however, according to the PwC analysis. The Games will be bringing in lower spending visitors as opposed to the usual high-spend summer tourists. In London, PwC expects an ADR gain of 1.2%, taking rates to over £135. The news is worse in the regions where ADR is expected to drop by over 2% to £57, which would extend the period since the last reported regional growth to four years. Although occupancy is expected to jump in the regional hotels, the benefits of the Olympics to rates or RevPAR are not expected to stretch much further than the M25 boundary. The analysis suggests the only regions likely to see a boost in demand as a result of the Games are Weymouth and areas hosting football events. Although there could be some London overspill and benefits from the continued cost-conscious ‘staycation’ trend and other events, PwC said the regions would have a difficult 2012 although the post-Olympics hangover that London would suffer might benefit hotels outside the capital. “Regional hotels could at last see some rates growth in 2013. Historically the impact of branded budget development has supported occupancy while weak economic growth, oversupply in some cities and the tide of branded budgets have depressed rates in the Regions. In 2013 we think this may change with rates rising by 2.4 per cent but occupancy falling marginally by 0.3 per cent,” Milburn added. The picture for London in 2013 looks less than certain. PwC expects lower demand in the post-Olympics hangover to lead to falls in occupancy, ADR and RevPAR. The trend of lower consumer spending is also not likely to be reversed, according to the analysis. London has seen an increase of 13% in budget hotel rooms and the budget sector represents a large proportion of the rooms in the 2012 pipeline. The future for hotels, according to Milburn, remains the economy and its impact on consumer attitudes and spending. “Many operators are positive about London’s prospects after the Games, encouraged by the global awareness of London as a destination and the on-going improvements in infrastructure. Others, however, have voiced concerns about the supply spike and how it will be absorbed. At the end of the day, it all depends on whether the economy perks up,” he said.