p16 pink nov14 12/11/08 18:40 Page 16
City & finance
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HOTEL FAILURES PREDICTED: An 80%
year-on-year increase in the number of
Travelodge offers
hotels going out of business is just the “tip
of the iceberg” of what is to come, according
to PricewaterhouseCoopers.
Its own analysis of the hotels, restaurants
£5m of price cuts
and pubs sector showed 281 failures in the
third quarter of this year, up from 175 in
Tricia Holly-Davis.
month that will see 200,000 bed-nights priced
2007. Of those, 18 hotels failed, up from 10 TRAVELODGE is following the example set by from £9 to £29. These promotions cover key
in the same period last year. no-frills airlines in the last recession by starting holiday periods including Christmas, the
The firm said conditions would worsen as a £5 million price-cuts package for the rest of February half-term and Easter.
the impact of the credit crunch unfolded. 2008 to attract business. Travelodge managing director Guy Parsons
“As the downturn tightens its grip, it is easy The budget hotel chain hopes the move will said: “We are stealing customers from midmar-
to believe what we have seen so far is just the put pressure on midmarket rivals by encourag- ket rivals everyday but we intend to up the ante
tip of the iceberg for hotels,” said Stephen ing customers to switch to the budget sector. even further.
Broom, PwC’s hospitality and leisure director. Travelodge has cut rates at properties in 15 UK “During the last recession, the budget airlines
cities, taking an average of 10% off every room drove a structural change in the market that did
■ ‘Hotels face harrowing 2009’: p26 night for the rest of the year. not reverse when good times returned.”
Room prices will be dropped below 2007 Travelodge also plans to open 22 properties by
prices to drive volume and take market share Christmas at a cost of £125 million. These will add
from budget and midmarket rivals. 2,000 rooms to its portfolio, in line with a goal of
I-C Hotels posts
It follows a promotion announced earlier this opening 4,000 new rooms throughout 2009.
28% profit fall
Sol Melia suffers 41% drop in profit
SPANISH hotel chain Sol Melia suffered a 41% “The bankruptcies of major operators in the
INTERCONTINENTAL Hotels reported $91m in decline in net profits for the nine-month period UK, along with problems in the airline sector,
profits for the third quarter ending September, to the end of September, citing “one of the worst have had a more than expected negative impact
down 28% for the same period a year earlier. economic crises ever”. during this summer season, affecting the
The company, which also operates the Holiday The company posted an ¤80m net profit, company’s main feeder markets,” Sol Melia said.
Inn and Crowne Plaza brands, also warned of a down from ¤137m a year ago. Total operating Net profit was also hit by failure to sell any
“sharp deterioration” in market conditions for revenues for the period slipped 3%. Revenue per assets amid a credit freeze and a depressed real
October, with preliminary data showing a global available room for the month of September was estate market.
revenue per available room decline of 4.5%. down 2% on September 2007. To stave off further losses, Sol Melia has
Chief executive Andrew Cosslett said it was Sol Melia blamed the results on a sluggish capped its 2009 spending at ¤100m, which is
responding by keeping tight control of costs. summer season in Spain, where bookings from predominantly made up of funds for general
“Throughout 2008 we have been controlling the UK and Spanish markets fell significantly. upkeep.
costs and capital spending tightly, and we are
taking the necessary steps to manage both to be
below this year’s levels in 2009,” he said.
However, Cosslett said the company would
continue with plans to raise capacity next year.
“We expect the rate of new room openings to
remain strong. Around 90,000 new rooms [540
hotels] are under construction, and over half of
these are currently expected to open in 2009.”
He added that “a small number” of new hotels
were experiencing construction delays.
The company’s operating profit from
continuing operations grew by 14% to $150m,
mainly driven by strong performance in Asia and
the Middle East. Revenue rose 7% to $486m. The Sol Melia Marbella Dinamar: the Spanish hotel chain’s profits fell to ¤80m for the first nine months of the year
16 14.11.2008
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