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Hotels facing dire outlook for 2009
UK hotels of all shapes and sizes are in for a rough ride over 2009 with nearly 200 per cent more hotel companies becoming insolvent in Q1 2009 than in the same quarter last year.
According to PricewaterhouseCoopers (PwC), the rapid increase in failing hotels is made worse by the fact that even though more people are likely to stay in the UK for their holidays - seen as a lifeline for many hotels - people are likely to look for alternative accommodation as the recession deepens.
A PwC consumer poll, conducted over the Easter holidays, showed a 12 per cent increase in the number of people choosing to go camping, caravanning or to a holiday park, despite the April showers.
Although the results will be welcomed by camping sites, hotel operators will be further pressured to adjust their prices and strategies as people look for more affordable, self-catering options.
Stephen Broome, PwC's director, said: "It is likely that many of those who remain in the UK over the summer will opt for self-catering, camping, caravanning, holiday parks and visiting relatives, rather than staying in hotels.
"While current exchange rates should encourage some travellers from abroad to visit, the prospect of a warm and sunny British summer is unlikely to provide much shelter from the storm for hotels, whatever the weather."
The prediction comes as regional hotel room rates have fallen more dramatically than was expected - by 11.9 per cent compared to a forecast of 8.7 per cent.
Broome predicts that further price cuts will be inevitable.
"Given the slow and rocky recovery ahead we therefore expect to see further room rate declines in both London and regional hotels through until autumn at least.
"Discounts will not drive additional demand, and are unlikely to persuade those who aren't planning to travel to leave their homes, or indeed their caravans."
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