Rates at London’s hotels are set to fall next year due to the increased supply of rooms and the weak economy.

A report from accountancy giant PricewaterhouseCoopers (PWC) is predicting that there will be a post-Olympics “hangover” for London’s hotels in 2013.

London’s properties have enjoyed a record year in 2012 with a record-breaking average daily rate of £143 per room – up by £10 on 2011 which was also a record year.

But PWC is forecasting that occupancy rates at London’s hotels will fall to 77 per cent in 2013 – compared to 80 per cent this year – which would be the lowest level since 2005. This struggle to fill rooms is likely to drive revpar down by 7 per cent to £106.42 per room next year.

Liz Hall, head of hospitality and leisure research at PWC, said: “The London hotel market has demonstrated remarkable resilience since the start of the recession.

“This has been helped by one-off events such as the Jubilee and 2012 Games, which have driven some highs and lows (reduced business travel) this year.

“It’s hard to feel confident about 2013; there will be winners but a weak economic and travel environment, a fight for market share and more new rooms to fill mean many will feel the hit.”

Hall added that London’s mid-range hotel sector may feel the squeeze from new boutique-style properties and expanding budget brands.

“There has been a flurry of high-end, boutique and branded budget openings across London, often in newer hotel locations,” she said. “These new products clearly differentiate themselves and offer lower rates to gain market position and lure consumers away from mid-range products.

“With at least 2,400 high-end and boutique rooms set to open in London in the next couple of years, the need to differentiate and reinvent the middle ground becomes ever more necessary.”

Outside London, UK hotels have seen another flat year in 2012 with average daily rates of £58.39 per room which is expected to stay around the same level next year.

PWC is more optimistic for a recovery in the meeting and events sector and said there was some evidence that “the downturn in this sector has bottomed out”.

Robert Milburn, hospitality & leisure leader at PWC, added: “More supply, changes to company procurement policies, sustainability issues around travel and communications technology have all left their mark.

“However, renewed optimism for a modest revival in conference and event demand and a continued resurgence in business travel should ensure the slow UK hotel recovery continues.”

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