Partner Article

North East tourism sector faces "lost decade"

The North East tourism industry risks a “lost decade,” according to a report by business advisory firm Deloitte that says it could take five more years to return to pre-2008 levels.

As the region celebrates National Tourism Week, 38% of businesses think it will be 2017 at the earliest before the North East hotel market returns to its previous peak. A further 43%, think it will be at least another three years before the market recovers.

Five years since the credit crunch, almost half of the businesses and investors surveyed for the Deloitte UK Hotel Performance and Investment report in conjunction with TNS are still finding it tough to secure financing for any type of project in the regions, either new developments or acquisitions.

The main bright spot in the Deloitte survey was in the upper-midscale and upscale sectors in the regions, which recorded a growth in revenue per available room, with respondents citing a return of business from corporates.

Paul Feechan, Office Senior Partner at Deloitte in the North East said: “The results of the Deloitte survey make sobering reading for the North East tourism sector. Firms have had to make a number of tough decisions in recent years to maintain their profitability and the regional market is more challenging than London.

“However, we have seen funding being made available to thriving businesses in the North East to make important new investments in upgrading and branding existing hotels”.

Aran Handa of the Cairn Hotel Group, which is based in Newcastle, said: “While the regional market is tough, funding is available for the right projects. Our business has been successful in raising finance recently to acquire and redevelop a number of high profile hotels in the North East, including the Doubletree By Hilton at Newcastle Airport, our recently rebranded Holiday Inn hotels at the Imperial Hotel in Jesmond and the Scotch Corner hotel, and our Mercure hotel at the King’s Head in Darlington.”

The Deloitte findings were drawn from a survey of owners, operators, lenders, developers and investors at the European Hotel Investment Conference.

This was posted in Bdaily's Members' News section by Deloitte LLP .