UK hotels set out again on the road to recovery in May after a halt in April due to the volcanic ash cloud. Occupancy and average achieved room rate (AARR) increased by 4.7% and 3.9% respectively, pushing rooms yield up 8.8% to £65.03, compared with the same period last year. In this article, Robert Barnard, Hotel Consultancy Services partner at PKF Accountants & business advisers, looks at the main trends for UK hotels in the month of May.

Regional UK hoteliers posted the first increase in rooms yield for 2010 in May. The positive performance was driven by the 5.7% rise in occupancy to 72.7%, as AARR fell by a small 0.5% year-on-year. Meanwhile, London hotels continued to gain strength in occupancy and AARR, up 3.1% and 9.0% respectively, pushing rooms yield up to £107.70. With an average occupancy of 83.8% and AARR of £128.52, it seems London hotels are back in demand.

All London hotel segments (from De luxe to Tourist) posted positive rooms yield growth in May. AARR increased for all segments as did occupancy except for business class hotels where it was marginal with a 0.7% fall in occupancy, but a 9.5% rise in AARR.

The majority of London segments achieved an occupancy level above 80% except for superior de luxe hotels, which were not far behind at 79.8%. Although Superior de luxe hotels did not achieve the highest occupancy, they did achieve the highest rooms yield growth in May, up 14.7% year-on-year. This was on the back of an increase of 4.2% in occupancy and 10.1% in AARR. Tourist hotels with over 400 rooms followed, with occupancy up by 6.1% and AARR by 7.5%, resulting in a 14.1% rooms yield increase compared to the same period last year.

Amongst the three regions, England posted the best performance. Rooms yield was up 6.3%, driven by an increase of 6.1% in occupancy and 0.1% in AARR. Scotland managed a small 0.3% rooms yield increase the combination of a 2.8% rise in occupancy and a 2.4% fall in AARR. May was a disappointing month for Wales, with rooms yield down 2.0% despite an increase of 1.7% in occupancy. AARR fell by 3.7%.

Regional UK cities reported mixed results with some achieving stellar growth and others posting large declines year-on-year. Rooms yield in Blackpool fell by 14.7% as a result of a 9.8% drop in occupancy and 5.4% decrease in AARR. Blackpool hosted a number of events in the previous May, including the annual Dance Festival and the annual National Federation for Young Farmers' Clubs convention, which relocated to Devon this year and probably helps explain the decreases the city experienced.

On the brighter side the West Midlands posted impressive results in May. In Stratford-upon-Avon, occupancy increased by 13.5% and AARR by 2.7% resulting in a 16.6% rise in rooms yield year-on-year. A number of conferences hosted in Birmingham pushed rooms yield up for the city and airport area. This included the quadrennial IPEX and triennial Total Processing & Packaging exhibition. In Birmingham, city occupancy increased by 11.4% and AARR by an impressive 43.5%, driving rooms yield up a stellar 59.9% to £61.65. The Solihull and Birmingham Airport hoteliers reported a staggering 55.8% rooms yield growth in May, on the back of an increase in occupancy and AARR of 26.2% and 23.5% respectively. Coventry hosted the Rhythm Weekend festival and also benefitted from its close proximity to Birmingham and Stratford-upon-Avon. Occupancy increased by 18.1% in Coventry and AARR posted a 2.2% rise to push rooms yield up by 20.6% year-on-year. A number of events in Reading helped the city in achieve strong results in May, as well as recovery over last year. Events included the Reading Carnival and Reading Beer Festival, which increased demand and pushed up occupancy by 39.4%. Together with a 2.2% increase in AARR, rooms yield reported a large 42.6% rise year-on-year.

For more information contact Robert at robert.barnard@uk.pkf.com or on 020 7065 0000