London hotels are set to face the worst economic conditions in 15 years, according to PricewaterhouseCoopers (PwC).

The financial advisory company claims that RevPAR in the capital is set to fall by 12 per cent in 2009 as occupancies tumble.

Robert Milburn, the PwC head for UK Hospitality & Leisure, said that UK hotels – and particularly those in London – have seen a boom period of unprecedented revenue growth and investment over the past five years.

"This means as London stares down the barrel of a recession they are at least in good shape," he said.

However Milburn predictes that the economic slide will take London’s RevPAR from £94.28 in 2008 to £82.92 in 2009, as companies cut costs and travel budgets, alongside squeezed consumer income.

He added: “The ricochet from continuing turmoil in the financial markets, the sharp global economic slowdown, and the negative consumer and corporate sentiment means that the outlook for travel and hotel demand has deteriorated significantly in recent weeks. But the outlook for 2009 is even more worrying.

“Occupancy in London looks set to drop to 70 per cent next year. The capital has not seen a decline on this scale since 9/11, and before that as far back as 1991, when they fell as low as 65 per cent.”

PwC’s main scenario is based on a 0.5 per cent decline in GDP next year and takes into account the recent interest rate cut. As a result,PwC predicts that the UK hotel industry should see a 4.3 per cent RevPAR decline as room rates fall for the first time since 2003.

However, should the UK face a harsher recession (a 1.9 per cent decline in GDP in 2009) then the outlook for hotels is even starker. In this instance UK RevPAR could fall by nearly 10 per cent and room rates in London could plummet to give a RevPAR drop of 23 per cent.