‘Cautious optimism’ in hotel figures

Tom Roach

Hotel occupancy levels in Cornwall increased by just over 2% in 2010 on the year before, according to the latest findings from accountant and business adviser Winter Rule.

The tourism team at the Truro-based firm has been surveying Cornwall’s hotel sector every month for the last 20 years, and has identified cause for cautious optimism in 2011.

The first half of 2010 was particularly encouraging, with occupancy consistently higher than in 2009, although August continued in its sustained trend downwards. September, October and November also saw an increase in hotel stays, but the cold weather had a significant impact on December’s figures.

Tom Roach, partner at Winter Rule and tourism team leader, said: “The mere mention of snow had the cancellation phones ringing, and this was borne out by the poor performance in December. However, the figures from the rest of 2010 show that some of the falls of late 2007 and 2008 have been reversed and the overall trend was positive.

Roach said he was “cautiously optimistic” about the outlook for 2011, with advance bookings looking “reasonable”, but he said there was some evidence of belt-tightening and January’s VAT increase was likely to impact on the early part of the year.

Looking further ahead he said interest rates would become the big issue, with most commentators expecting an increase between the middle and end of the year. This would have an immediate negative impact on anyone with a variable rate mortgage – almost a third of the total mortgage market – and leave them with less cash to spend.

However, with so much of the south west relying on the ‘silver haired’ market, which has less exposure to mortgage rate changes, the impact was likely to be mixed and longer term a hike in rates would put more money in the pockets of people with savings, which tended to be the older generation.

Roach concluded: “The VAT rise is likely to cause some immediate belt tightening and I would expect some short-term negative impact from any rise in interest rates, but in the longer term savers will start to see more income. On balance, 2010 showed encouraging signs of improvement despite the weather and I’m cautiously optimistic this will continue into 2011.”

The Winter Rule monthly hotel survey covers 25 of Cornwall’s key hotels of different sizes and markets which between them offer more than 800,000 bed nights a year.