UK hotel prices are falling fast

Hotel prices in the UK are falling faster than in the rest of the world, one expert has warned.

According to Nigel Pocklington, the managing director for Hotels.com, the UK has seen a four per cent fall, which is a worryingly larger decrease than what has occurred in other comparable economies.

His comments on based on Hotels.com’s Hotel Price Index for the period between July and September 2008, which revealed that hotel prices globally fell by an average of three per cent, compared with the same period in 2007.

This is the first year-on-year fall in prices measured in any quarter since the Hotels.com Hotel Price Index (HPI) started in January 2004.

According to the website, the drop in prices globally was driven by falls in room prices across North America (where prices fell by five per cent), Latin America (where prices were down one per cent) and the Caribbean (prices down four per cent).

Prices in Asia remained flat while in Europe average prices rose by two per cent as hoteliers defied the general trend, maintaining prices during the summer months.

Financial powerhouse PricewaterhouseCoopers (PwC) recently issued a report which stated that UK hotels have seen a boom period of unprecedented revenue growth and investment over the past five years.

However, that may now all be set to change.

The recent economic slide is set to take London’s RevPAR ( revenue per available room, the industry’s benchmark) from £94.28 in 2008 to £82.92 in 2009, as companies cut costs and travel budgets, alongside squeezed consumer income.

PwC revealed that the descent began in September of this year (2008), and despite following a fifth successive year of room rate growth, the autumn is seeing a demand slowdown in London hotels with occupancies falling and room rates set to follow.

Nigel Pocklington, the managing director for Hotels.com, said: "Generally speaking, hotel prices have been rising for the last four years, so there really has been a reflection point this year of where the slowdown begins to bite.”

However, he explained that the situation in the UK differs somewhat from this positive global picture.

“In the UK prices have fallen by four per cent overall, which means they are falling faster here than they are globally.

“A lot of the cities that normally are right at the top of the league tables for most expensive places to stay, are showing some reasonably big falls. The price in London falling for example by three per cent is unusual.”