Hotel occupancy in London expected to drop during the first post-Olympic summer
Wednesday 24, April 2013
Historically, post-Olympic years are challenging for hoteliers in host cities. In London, many new hotels were built to meet the demand of the Games and now hoteliers are struggling to fill them. An increased amount of empty rooms leads to a more intense competition.
Hotwire.com has signed on many London hotels as industry experts anticipate a potential slump this post-Olympic summer. Although the British government predicted that an additional 4.5m visitors to the city in the four years after the Games, analysts and industry experts are starting to sense that this may be an overly optimistic view. Historically, post-Olympic years have been quite challenging for hoteliers in host cities as many built new properties for the Games, but were unable to fill them the years after. This leads to more competition and lowered prices. For example, in 2011, one year after the Vancouver’s Games, the city’s average hotel prices fell by 29% as occupancy numbers dropped. The same was seen in Beijing where revenue per available room fell by 43% following the Games.
In London, many are predicting similar trends will ensue following last year’s weaker than expected Olympic hotel demand. Industry experts point out that even amidst the projected tourism boom of last year, the number of tourists to London actually dropped from 3.36m to 3.18m. So, hoteliers assuming a strong and quick rebound during the traditionally slow post-Olympic years could be left with many empty rooms needing to be filled.
“It’s no secret that hotel construction, and therefore quantity of rooms, surged in London leading up to the summer games. But, what is still unknown is how many of those rooms will be filled the years coming. It’s even harder to predict when we take into consideration the weakened European economic climate and declining US tourism rates,” said Tara Stangel, director of Hotwire.com’s hotel team. “However, the good thing is we have plenty of internal data, expert analysis, and prior Olympic cities to assist us in our expectations, and most signs point to the fact that London hoteliers will have to be more creative when it comes to sustaining occupancy during these post-Olympic years. Many seem to sense this already as we’ve seen an uptick in hotels utilizing sites like Hotwire as new channels to maximize revenue.”
Hotwire currently works with more than 300 hotels in London, helping them increase occupancy levels and increase revenues and meet sales goals throughout the year, especially in times when demand is slower. Among Hotwire’s partners is PPHE Hotel Group, a full-service, upscale and lifestyle hotel brand for business and leisure travellers. It has 38 hotels in operation and will bring three new hotels and one mixed-use development totalling nearly 800 guest rooms to market by the end of 2015.
“Our partnership with Hotwire.com provides us with the opportunity to potentially increase sales of our London hotel rooms in London and beyond. Particularly beneficial during quieter business travel periods, the partnership enables us to strive to generate additional revenue,” Annalisa Mutti of PPHE Hotel Group commented.
“On average 30% of UK hotel rooms are left empty each night. The opaque model operated by Hotwire offers hoteliers the opportunity to sell these empty rooms at a discounted price and earn revenue on inventory that would otherwise go unsold,” commented Stangel from Hotwire.com. “Revenue managers at London hotels seem to prefer Hotwire.com’s opaque model to flash sites or discounting heavily through traditional online travel agents, because Hotwire gives hoteliers the option to sell their distressed inventory at a discount cost, without revealing their brand name and possibly compromising retail purchases.”
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