Recession damaged hospitality less than expected, shows report

05-Nov-2010 - Last updated on 26-Apr-2021 at 17:35 GMT

Hotels suffered the least from the tighter economic climate

A new report on the state of British hospitality has found that the sector has survived the recession with less damage than predicted, although some lasting impacts have considerably altered the face of the industry

According to ‘British Hospitality: Trends and Developments, 2010’, published yesterday by the British Hospitality Association (BHA), the hospitality industry contributed 4.1 per cent of the total UK economy this year.

“The industry has successfully survived the recession without incurring the widespread damage that many had predicted at the outset,” said BHA chief executive Ufi Ibrahim.

The BHA is pushing for a stronger partnership between the industry and government, which the group says is crucial for driving the industry forward and cementing its contribution to the economy.

Ibrahim said the BHA’s new report “underpins the importance of our industry to the UK economy and provides a valuable source of intelligence and data on which sound policy decisions – both commercial and public – can be made”.

Hotels

Figures in the report reveal that of all the hospitality sectors, hotels suffered the least.

New hotel rooms continued opening in 2010, although a mark of the recession was that over half of these (5,300 of 10,400) were in the budget sector.

In 2010, the UK had a total of 112,600 budget hotel rooms, compared to 50,000 in 2001.

However, even the budget sector felt the impact of the tighter economic times, with lower occupancies, average room rates and revenue per available room.

Another impact of the recession was that the majority of new hotels that opened in 2010 were branded properties, with many developments undertaken by franchises. Bank funding restrictions in the year meant that around 70 projects were abandoned or put back to an indefinite date in the future.

Restaurants

The number of restaurants and quick service restaurants were found to have increased in 2009, although the total number of meals served declined from 5bn to 4.8bn.

“Meal offers are still being provided at the levels of twelve months before, but the style of offer has been changing,” said consultant Peter Backman.

“There are still plenty of straight '2-for-1' and money-off offers, especially in the pizza restaurant sector, where the UK’s largest restaurant brand, Pizza Express, has led the pack. But many offers are now being more targeted, for instance at particular times of the day or week when business is traditionally slack. Other deals are structured to focus on higher margin items which can readily withstand a price reduction.”

Cautious confidence

According to Kathryn Pretzel-Shiels, head of the UK’s hotel, restaurant and travel industries for American Express Merchant Services, hospitality spending is heading towards pre-recession levels.

The industry, she says, can be “cautiously confident” that there will be further growth, albeit at a slow rate.