Hot summer for London hotels but chill is on the way

London hotels had a good summer for revenue, with a report today showing that average room rates increased for the first time in two years.

Revenues per available room (revpar) grew 19.8% to £117 in the quarter to September 30, driven by a 15.6% increase in average room rates.

Across the country revpar jumped 10.8% to £49 after a 6% increase in occupancy to 74.9% and a rise of 4.5% in the average price charged to £65, the study by Deloitte found.

Demand for rooms in the capital grew thanks to July's Farnborough air show and an influx of Arab travellers in the lead up to Ramadan, as well as London Fashion Week and London Design Festival towards the end of the quarter.

But the trend is unlikely to continue as Deloitte predicted London's revpar will fall 5.2% next year with occupancy and room rates falling 3.2% and 2%.

Marvin Rust, hospitality managing partner at Deloitte, said: "There are clearly a number of challenges for hoteliers in 2011, including it being a non-Farnborough year, the year before the Olympics and the supply of luxury hotels in the capital expanding with the reopening of The Savoy and the Four Seasons."

Regional hotels are expected to see revpar gains next year, rising 4.5% with both occupancy and average room rates experiencing growth.

"With the headwinds of job cuts in the public sector and the increase in the rate of VAT we expect these will have an effect in suppressing demand and margins particularly in the early part of next year," Rust said.