Europe is expected to repeat the revpar drop of 4.2% suffered in 2008 in 2009, according to Jamie Chappell, managing director of STR Global. But he warned that this average figure will vary across different markets.
One of the worst hit looks set to be London, at least according to PricewaterhouseCoopers which on Friday said its "downside" case for the UK capital was now to become the official forecast.
Speaking at the 4th New Year Hotel Investment Summit held last night in London at the May Fair Hotel, Chappell unveiled performance figures for the year 2008.
These showed that Italy, Spain and Ireland had suffered the most with Italy down 9.9% for the year. The biggest falls, however, occurred in the last quarter of the year with double digit drops for both Italy and Spain.
The UK stood still for the year overall but declined 8.2% in November and 5.8% in December. All the major countries were in negative territory by November and December.
Chappell warned of the "Copenhagen effect". The Danish capital in the last downturn suffered a price war that saw five-star hotel rooms selling for less than three-star rivals. By 2007, rates had still not returned to the levels seen at the peak in 1998.
With some exceptions, notably Prague, this cycle has not seen significant oversupply and operators' increased yield management expertise both mean that the "downturn should be less painful and we will come back sooner", said Chappell.
It was noted, however, that markets with more international brands were holding rates better than those dominated by individual owner-operators such as Italy. Also, Chappell expected mature markets to hold up better than new and emerging destinations.
Meanwhile, PWC is now forecasting a 23.3% drop in revpar for London during 2009, the worst case scenario outlined last November.
"Falling consumer spend and investment, combined with the prolonged financial market crisis, will restrict economic growth over the next 12 months," said Liz Hall, head of research for hospitality and leisure at PWC.
The expectation is for a 2% drop in UK GDP this year following a 0.9% rise in 2008. "Although visibility is restricted, evidence points to an unprecedentedly poor hotel outlook for the year," added Hall.
The beneficial effects of the fall in Sterling were acknowledged but this was expected to be countered by a drop in margins and a switch by domestic UK holidaymakers to self-catering.