Ash cloud aftermath

Wednesday 14, July 2010


Ash cloud aftermath


The lingering memory for travellers caught up in the airport closures earlier this spring because of the eruption of the Icelandic volcano, Eyjafjallajokull, will be of days wasted at airports or meetings and holidays cancelled.


For hoteliers in London and the city's two major airports, Heathrow and Gatwick, the closures had no significant effect on the long-term trend toward growth in revenue per available room (RevPAR), according to data from STR Global, the leading provider of market information to the global hotel industry. See the trend lines in the graph below.


The initial RevPAR gains because of airport closures were to be expected. However, hoteliers did not take advantage of the stranded travellers by massively increasing their average daily rate. Heathrow saw the highest increase in year-on-year rolling-7 average ADR and this was, for the circumstances, a relatively modest 24.5 percent. It was the peaks in occupancy that drove RevPAR upward. For the period from the beginning of April to early July, the change in year-on-year RevPAR, measured using a running seven-day average (in which each day is the sum of the six days ahead to even out the effect of weekdays and weekends) for London, Heathrow and Gatwick peaked during the closures of mid-April. London had a 39.6-percent improvement in RevPAR, Heathrow rose 68.6 percent, and Gatwick increased 42.3 percent.


In contrast, hotel performance fell well below trend in the days immediately following the reopening of the airports on 20 April. These were caused by the significant cancellations in meetings and group business made in the light of the uncertainty at that time.


Later, in mid-May, the closures of the airports this time saw a more modest reaction as travellers coped better with the problem. The peak in the increase in RevPAR toward the end of May reflects the second May bank holiday falling on Monday 31 May, to be followed by half term for schools, compared with Monday 25 May in 2009.





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