Birmingham hotels are likely to experience a slowdown rather than a meltdown in 2008 and 2009, according to accountants PricewaterhouseCoopers.
Its latest Hospitality Directions: UK Hotel Forecast survey suggests that although there will be fallout from the current global financial uncertainty and economic slowdown, the city’s hotels are relatively well placed to cope.
David Waller, regional chairman at PwC in the Midlands, believes there are still opportunities to increase revenues.
He said: "This is a time for hotels to hold their nerve. While the industry will feel the pinch from the latest economic situation, it is coming from a good position with some excellent products in the market.
"In fact, Birmingham hotels overall should still see reasonable growth through to the end of 2009. But the economy is very fragile at present and another tilt could have a more significant impact on the sector."
Birmingham is expected to benefit from a cyclical upswing in conferences and exhibitions this year with some small increase in demand and room rate gains of 2.9 per cent followed by 3.1 per cent in 2009. Overall, UK revenue per available room (RevPAR) is expected to be up by a healthy 4.4 per cent in 2008 and 4.1 per cent in 2009.
Hoteliers revealed strong revenue growth towards the end of 2007 but many expected a solid, if unexciting, year in 2008.
Occupancy levels in the UK will remain flat or may even see some small declines. Average room rates have been soaring, especially in London, for several years and although they will see continued growth over the next two years, the pace of growth is slowing.
Mr Waller said: "As hotel room rates start to ease, operators have become more aggressive with sophisticated revenue management strategies and stealth charges.
"A tightening of corporate travel budgets and policies and more careful consumer spending will make it harder to attract both the consumer and the corporate pound.
"It is an interesting time for the industry and all eyes are on the economy but the next 18 months will not just be about the economy. There are many intangibles that drive consumer choice. Many operators have invested heavily in quality products and service in recent years. This should pay off now by helping deliver an experience which consumers may recommend to their social networks - online and in person."
However branded budget hotels could also be beneficiaries of the tougher times.
Mr Waller said: "So far the pain has been felt mainly in the deals market although it is having a creeping effect on trading. But we would stress that the sector is generally in very good shape with focused management and some exciting products.
"In terms of investment and development, the credit crunch may even be a good thing for the industry. Large developments that have not been committed to yet could be postponed and result in less new supply coming on to the market in 2009. This will help keep rates up."