|23 October 2003 - After a tumultuous year, the
hotel industry has reached the bottom of the cycle and market conditions
are set to improve, according to experts speaking at the 15th Annual European
Hotel Investment Conference held by Deloitte today in London. The
recovery in hotel performance is expected to lead to increased investment
activity within the sector, led by the private equity community and financial
The optimistic sentiment comes after a pre-conference poll of 240 hotel industry executives by Deloitte and TNS Hospitality and Leisure revealed that 53% of respondents expected London hotel revenues to return to the record highs of 2000 within three years, with developers and operators the most optimistic. Over 92% of respondents believed transatlantic travel would recover within the same time, with a significant majority of those surveyed believing the recovery would come following the return of consumer confidence.
Marvin Rust, hospitality managing partner at Deloitte and conference chair, commented: “The hotel industry has suffered a series of major shocks, with war and SARS this year compounding the difficulties faced in 2001. However, the hotel industry has demonstrated before an ability to bounce back after difficult trading conditions. With consumer confidence showing signs of returning and hotel performance already starting to improve in the US and UK, the industry is on track to recover within a three-year timeframe, providing it suffers no further jolts.
“The predicted upturn in hotel performance is encouraging investment activity. Indeed more London based assets will probably change hands in 2003 than in almost any other year, with trade buyers joining the financial institutions and private equity players in the action.”
Nick van Marken, the partner responsible for hospitality advisory services at Deloitte, noted that despite economic volatility and challenging market conditions, investment in the European hotel sector is set for record levels in 2003: “There is clear evidence of a recovery being priced into recent transactions, with no evidence of discounting. Several recent single asset sales have set new records and there has been strong competition for portfolios, notably in the budget/economy sector. Buyers are diverse and include private equity, high net worth individuals, and institutions. Southern Europe and the UK have been a particular focus.”
Other key survey findings:
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|Also See:||RevPAR for London Hoteliers Reverses 18 Month Trend; September, 2003 Indicates Rise in RevPAR / Deloitte & Touche LLP / October 2003|
|March 2003 - London Hotels Record Double Digit Declines in RevPAR; Occupancy Falls 8.6% Compared to Previous Year / April 2003|