London hotels pants in October…

The facts as we know them:

• STR has released preliminary data for London hotels in October
• It says an increase in supply (+2.9%) met a decrease in demand (down 1.2%)
• This led to a 4.0% decrease in occupancy
• Rate fell by 7.7% and REVPAR was some 11.4% lower

Comps are tough, the Rugby was on last year:

• Well, yes. But that would only account for the demand shift
• And, whilst demand can go down & then up, supply increases tend to be permanent
• STR points out ‘the absolute occupancy level would be the lowest for an October in London since 2008.’
• It says ‘the y-o-y percentage changes also mark London’s largest October declines for occupancy and ADR since 2001.’

That’s not very good, is it?

• No two ways about it, this is negative news
• Facility creep – putting on more services, charging higher prices – may exacerbate the problem
• Room rates have behaved as one would expect. Some operators have cut costs & other have been obliged to follow suit

Is this a one-off, bad month?

• Well go on, you can believe that if you want
• But the answer, probably, is no
• Listed UK hotel operators are thin on the ground but arguably Whitbread, which has put on a lot of capacity, might have timed its expansion better