Hotel operators across the UK are set to experience further deterioration in growth rates before Christmas 2009 but are now "over the worst", according a new report by PricewaterhouseCoopers (PwC).

In its latest hotel forecast - UK hotels forecast: Not out of the woods yet - the professional services firm predicts an overall 12.1 per cent decrease in RevPAR for the year, but expects the rate of decline to slow heading into early 2010. Domestic and overseas leisure tourism has helped to offset a significant reduction in corporate travel during 2009, although PwC has warned that the business and conference markets remain critical to the industry's recovery.

PwC's latest research has also found that room rates are nearly £20 cheaper on average compared with 2008, which has seen London slip from second to 22nd in the global list of most expensive destinations. Robert Milburn, UK hospitality and leisure leader at PwC, said: "While rate declines will slow at last, economic and travel fundamentals remain weak and despite accelerating cost cutting programmes, the evidence points to more savage trading at the end of the year.

"Rooms rates have become the sacrificial lamb in the battle for occupancy, and keeping rates low will continue to make it easier to attract last minute custom. It is a delicate balance and we are not out of the woods yet but, as the economy starts to stabilise, the path has at least become clearer."